I have never seen this before, only in a certain quest where the inhabitants of a village all had been turned invisible.
Did it also occur after you've closed the other 3 Oblivion gates ? - or did it only occur at Chorrol.
If it also occured after in the three other cities, it might be a side effect of you closing the Oblivon gate.
And do they look pink? or do they have pink color around them?
Edit:
I'm fairly certain after reading this post
http://forums.bethsoft.com/index.php?/to...;#entry16197851over at the Oblivion forums at The Bethesda forums that you have detect life on. If you read what Acadian say, he says this e.g.:
That means that she has to stop and pick flowers, swim in the beautiful waterfalls, eat lunch, look at the pretty clouds, and dawdle in a myriad of other ways. She wears lots of detect life range, and when a pink glow appears way ahead, she gets off her mare and sneaks up to take care of the threat.
As you can see, having detect life ON, will make others, including people in Chorrol send out a pink glow that's sort of fuzzy looking. You'll need to check your armour or weapons or your effects page to see if this is so.
Here's the description of Minor Life Detection:
http://www.uesp.net/wiki/Oblivion:Detect_Life
Reveals all visible and invisible creatures within M feet surrounding them with a soft purple glow.