D&D:O Slidin' Into My DMs #13 - Character Conflict

How do you deal with conflict between your players' characters in game? Do you encourage it? Help resolve it? How do you avoid letting it spill over and into conflict between your players themselves?

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Custom Origin/Racial Feats:(0:00)
Quick Ruling: Shadow Step and Darkness:(12:20)
Character Conflict:(20:17)
Player Conflict:(37:26)