Lanefan
Victoria Rules
Indeed; and the same is true of some earlier editions as well (though I think the OP was running 5e).Now I don't know what game you're playing, but at least in 5e, by RAW as long as you're doing melee damage you can choose to deal non-lethal damage.
There's a huge difference between "campaign-breaking" (where, say, the setting for some reason becomes no longer playable) and "campaign-altering" where something really big about either the setting, the PCs, or both changes but the game remains playable from that point under the new parameters.There are plenty of house-rules that are feasible to strengthen or weaken that rule. That said, if PCs are purposefully killing "good" guards (more on that in a second), they aren't good.
There are a couple of ways to signpost this to your players before they actually go through the action. They're all fourth-wall breaking and I know that some people don't like that, but I recall those older Bethesda games where you could actually kill plot-critical NPCs, but you'd get a big pop-up warning you that you'd messed up the flow of destiny or whatever and you should probably reload a save. "Reloading a save" doesn't happen in TTRPGs which is why I think it's fair for GMs to provide a bit of a "are you sure about that?" warning ahead of campaign-breaking decisions.
The OP's situation is IMO in the latter group.
Yep.This, of course, brings up a number of other issues, primarily about the risks of planning a campaign arc too far out in advance, because you never know when your heroes are going to turn into notorious villains.

For me, Plan A is so far off the table it might as well not even exist. But any of plans B, C, or (D) are certainly feasible, and allow the game to continue.There are plenty of ways to resolve this moving forward, but they really should all be done OOC in discussion with the players (and in this case, the GM).
1) You memory-hole the session. We'll call this Plan A. This is not as outrageous or as radical of a choice as it may sound. People will definitely have objections to the mere suggestion, but it is a choice and in certain situations it's a good one. I can see a DM handing their campaign off to a guest-DM for a few sessions, seeing everything come crashing and burning down around them, and saying "well that was a fun little jaunt through an AU, but let's get back to the real campaign." Not ideal, but it's there.
2) Plan B: The players decide to embrace their roles as villains. This, of course, changes the nature of the campaign, but if it's what the players seem to want, you can certainly roll with it. It might not be what the original DM wants, but there's clearly been a disconnect between the DMs and the players on the expectations on the nature of the campaign. That's something that really ought to be ironed out in a Session Zero and if you haven't got something like that set in stone then maybe you shouldn't be handing the keys to your kingdom to somebody else for a spin. I hope you've recognized that you were set up for failure here.
3) The players decide they have to find a way to redeem themselves. This is a classic trope, I'm sure I don't need to get too far into detail about it. It's also a more deeply involved affair, so we'll call this Plan C.
4) The players actions were retroactively "good". I like to call this Plan ACAB. The PCs, still trying to clear their name from the original murder, uncover rot and corruption so deep that it's infested the very city guard itself. They have, it turns out, unwittingly cleared the city of a substantial population of dirty cops, and the more evidence they uncover, the better chance they have of clearing their names for both "crimes", clearing their names, and restoring their standing in the city. As far as retcons go, it's certainly not terrible. And you can still have at least an NPC or two call them out and/or harbor continuing resentment for slaughtering them all before finding out they were corrupt. But it solves the problem without dramatically altering the course the campaign while also opening up complications in the relationships the party has with several members of the community. I think I like this one best.
That said, from reading further updates scattered through this thread by the OP, it seems that game is kind of on life support if still going at all; the original DM bailed, as it seems did all but two of the players.