Now, let me begin by saying that I LOVE the idea of the Council and 5th Column mixing it up on the street. If I'm just passing by, I'll frequently stop and just watch, then go in and pummel the survivors for kicks.
The problem comes when you get a mission chain that involves going out and finding Council on the street and beating them up, either "just because," or worse to beat some info out of them to continue a mission. Then, it's incredibly frustrating to see some level-appropriate Council, then watch all but one or two taken out before you get a chance to even touch one, THEN have to finish off the victorious 5th Column. Not that I mind that, but I have other fish to fry at that point.
I don't suggest eliminating the rival-fascist street theater, just give the Council an occasional level advantage, so there can be Council survivors for ME to pummel.