So I wanted to reach 1 humanity and play on the edge but the game won't let me. I can't go below 3 humanity and even though I've killed everyone on the streets after first 4 kills I stop losing humanity. So I can massacre everyone with no consequences. I can easily kill policemen and the level becomes empty and I don't even have to worry about police hunt.

With masquarade violations it's similar, it's rather hard to get consecutive infractions, I've had to repeat the action several times and try very hard to reach the 0 and be executed. That's something for Wesp5 to fix I think (if he would be interested). Unless it's unique for me only...

I think even with evil quests you can't go much lower as otherwise your beast will take over and the game would end.

Are you playing as Toreador? They gain (and lose) double the amounts of Humanity. I think I once (and I don't know even how!) went to... 2 points of Humanity?

Iirc: Humanity can be reduced to 2 or 1 only via quests and dialogue choices (as Sufyan said), and it can never be reduced to 0. Think of the 3 humanity threshold as the point at which simple killing no longer fazes or affects what's left of your human mind. ;)

Regarding consequences, hunters will spawn if you repeatedly violate the Masquerade.

Since you're playing that way (hehe), there's some useful tips about frenzy in this thread at GameFAQs:

http://www.gamefaqs.com/boards/914819-vampire-the-masquerade-bloodlines/45941729

Thanks guys, I figured that it was like that but wanted to be sure it's not a bug. It's strange to me that you can't get to 0 though, I know it would end the game but that's the point. Otherwise you can just go on killing spree without consequences (I'll be doing that in my next playthrough, that way I won't have to worry about blood). With violating the masquarade it's also bad but at least you can reach 0 (although it's still way too hard to achieve). If I want to jump from the ledge let me and do not create invisible walls. I know about hunters but at some point they're just cannon fodder and the violations are of no consequences (unless you reach 0). For interesting frenzy play it's better to install Clan Quest mod and have this as an ability that can be switched off and on deliberately. I've played it for a while as Nosferatu and it was cool as duck.

The consequence of low humanity is being more prone to frenzy, which can lead to Masquerade violations, killing NPCs, loss of control during a difficult fight, etc. Play however you prefer of course, but that sounds to me like it would defeat the point of the concept of frenzy...

This is actually part of the VtM pen and paper ruleset for the basic Camarilla morality path. You have to be a really depraved vampire to get past 3 Humanity, which is the minimum if you commit premeditated murder.

More details can be found here:

[url=http://whitewolf.wikia.com/wiki/Humanity_(VTM]http://whitewolf.wikia.com/wiki/Humanity_(VTM[/url])