Quick question, I hope...
When designing villains Tier iii villains give experience as standard, does that reward change when using lower or higher tiered villains? Just making sure before I begin awarding experience for the next set of villains & mooks for my campaign.
Yes, though by and large you shouldn't be using Tiers to design NPCs; rather, just modify their stats to suit your need. The Tiers are there to deal with NPCs generated by the *system*, not the GC. For example, the Wheelman's pit crew
ability summons Tier II toolpushers. This allows us to have the system simply introduce weaker or stronger NPCs by tweaking existing stat blocks.
Also, there's the rare problem that may crop up if you modify a Tier that is also modified by the system. This could theoretically break down, generating questions for which there aren't really any answers.
So ultimately, we strongly recommend GCs only tinker with stats and leave all their Tiers universally at III.
Now, to answer your original question, should a non-Tier III character become an adversary that the characters defeat in some fashion, the NPC's XP reward is modified as if the Threat Level were higher or lower, as described on page 452 of the Spycraft 2.0 Rulebook