With OXC1.00, I remember I mind controlled few civilians and gave them laser pistols and such. Then they reaction fire to the aliens (or MiB, as I was using the Final Mod 0.7). They even scored a kill.
But later they also reaction fired at me. I removed their weapons with MC to avoid further collateral damage.
So it's either something within the code that plays with MC, which causes them to be hostile to X-Com after a MC, or they are a third front on the battlescape.