I'm working on this challenge as well. Your findings are correct in that you only get credit for taunting a gang member if you do not already have aggro from them. You also cannot get credit for taunting your own gang members. It must be a rival gang, though you can compliment your own gang members and have that count for both the challenge and the achievement.
In order to speed this up, I did as follows. This is easier if you don't already control every area because you're more likely to find random gang members walking around in areas you don't control.
What you should have to speed this up:
A purchased building that's fairly close to the border of uncontrolled territory
A couple Health/Regen upgrades to be able to survive the onslaught of gang members (Combat is decent too. Basically, whatever will up your survivability)
What you should do
- Travel to an area you don't control and look for a gang member walking around to taunt
- Taunt them
- Gain 3 stars of notoriety by killing more gang members. This is enough to bring a decent number of gang members (and lieutenants, if you still need to grind those for the challenges). More than that and you risk getting killed outright, but you can of course grab more if you know you can survive.
- Start moving towards the building you own (the plan is to go in their to clear your notoriety)
- Before you clear your notoriety, blow up all their vehicles. Otherwise, when you clear your notoriety, they'll hop in their cars and speed away. Hopefully, you should have a decent number of gang members following you, so the casualties from the exploding cars shouldn't hamper you too much.
- Run inside and clear your notoriety
- Run back outside and taunt one of the gang members, get your credit for taunting them, then kill them because you won't get credit for taunting the same member twice.
- Repeat Steps 6 & 7 until everyone is dead
- Repeat steps 1 through 5
Since you only have to taunt 50 gang members, this hopefully shouldn't take too long. In addition, it will go towards the
Love/Hate Relationship achievement.
If you already have 100% control, I'm not sure if you will be able to use this method exactly, but the principle of aggro+pulling should still work.
Alternatively, rather than trying to grind this challenge all at once, it may be more sanity-saving to just stop whenever you see a gang member walking on the sidewalk and taunt them during your regular gameplay. Again though, it'll become more difficult to find the random gang members as you take over more areas.