I didn't extensively test it, but that should work. You can tweak the colors in the "Animations" tab. There's a custom color animation which returns a RGB value. And I mean, you must tweak the colors, I just gave each standing a unique color.
Thank you so much! This is exactly what i was after, thanks for your time.
Actually there are a few bugs with "negative" standings and a separate bug with anything but Neutral. I'll update this later.
Fixed it: http://pastebin.com/FsvNtJfr
Also I created a slight variation. Instead of showing the watched faction, this shows a specific faction, irregardless of which faction is the "watched" one. I did include instructions on how to customize the progress bars in the first trigger.