I have heard of being sent packing. (It's happened to me more than once) But, "packing from the hills" is new to me.
I would regarding "packing" as a participle, modifying "people". But, I suppose that "packing" could be considered to be acting adverbially, answering "how?" The prepositional phrase "from the hills" is clearly adverbial. Now, whether it modifies "packing" or "sent", I guess, must be up to interpretation.
It's an interesting sentence.
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