Help with the Consequences of Mass Murder

Canadutchian, you probably shouldn't read this one.

My players have been chasing this cult of evil humans trying to retrieve a MacGuffin. As a sidequest, I threw in a blacksmith whose brother killed a half-elf woman. The blacksmith wanted them to retrieve his brother, and bring him back to be punished for his crimes. No big deal.

My players start a half-cocked investigation where they try to break in to the hideout of a criminal group. My intention was for them to talk to the criminals (who aren't murderers, they're running a gambling den) and get the information like that. Instead, they try to murder everyone in the building, including the people who surrendered. Several of them are still alive, and are free to be witnesses and such.

My players are not normally murderhobos, and I am not sure why they thought they could get away with it, especially since they did nothing to cover their tracks.

The natural consequences here are:

  1. They get arrested, and executed.

  2. They are hated and chased out of town, with their names on wanted posters.

  3. The high-level bad guy the criminals were working for kills them.

I don't like these consequences, because I feel like having an abrupt end sucks, and also a drawn-out period where they are universally reviled also sucks. But not having those consequences destroys the verisimilitude of the world.

I need some way to show them that their actions have consequences, while not ruining the fun of the game.