I don't know of any other reasonable way to run a location based adventure. The inhabitants react.
In our version of GoDC the party bypassed the orc level then entered it from the back stairs with the intent of killing all the orcs. The assassin managed to sneak into the room with the sleeping orcs and killed them all in their sleep. Then she set off the trap! The party was scattered and all the remaining monsters became aware of them. It was great fun.
I served in the Army and lived on what is called a "Joint Security Station" in Iraq. It was basically the remains of 3 houses, surrounded by a wall and towers and occupied by two US infantry platoons (about 40 men each), a HQ section and an Iraqi infantry platoon. At any one time there was one infantry platoon taking care of security (half on guard duty, half sleeping and doing maintenance) and the other platoon was either sleeping or conducting missions (and our third platoon was at the Forward Operating Base for vehicle maintenance, down time or also conducting missions). The Iraqis were usually doing whatever they could to avoid going on missions with us.
If something happened, the entire station didn't erupt into action all at once. How could we? We wouldn't all know what exactly was happening. More often than not it would simply be handled by the platoon on guard duty. If it was more serious, each unit would gather in their areas, commanders and intel folks would assess the situation and we'd react accordingly. This takes a bit of time. If communications are down it means sending runners/scouts to find out what is happening (we had cameras and radios everywhere...so unlikely).
This is how I ran the orcs...when the place erupted, they formed units, they tried to coordinate and find out what was happening. The party realized what was happening and did what they could to disrupt that. Once they figured out who was in charge, they went for the Ettin and that demoralized the orcs.
Right now my group is in Lost Mines. They just cleared a couple of the easy encounters without alerting everyone. I basically have it divided into two factions: Black Spider and his minions and Mormesk and the undead and other guardians. As each faction becomes aware they will react. There may be some RP/negotiation. It may become a straight up fight. I don't know who will side with whom...
