Maybe stealing could be allowed once every so many levels? Seems like thieving at low level is just a bad idea since you can only steal once
I think once is good - I like it as it is. It makes you think when you are going to steal. There is no point stealing before level 4 if you want the decent skillbooks for example.
If you are planning to kill some NPC later you can think about when you want to trade with them (so you get your stuff back) and when they have decent enough items to steal rather than buy. It is part of the planning for me like putting points into a skill or anything else.
What I find interesting is that while some NPCs are helpful and stay completely still (Zaleskar for example) others wander around so much (e.g. Windego) that as a solo player you haven't a hope of pickpocketing them. It is hard enough catching their attention to talk to them.
It would make the game harder (and better IMO) if the necro witch who has the purging wand didn't just stare at the wall. Fighting her is now much harder but still pickpocketing her, refusing to give the wand to the dragon and then killing him is a obvious choice. Make her wander around I say and stop this cheat.
You are certainly at a disadvantage the fewer people you have in your party to distract people by talking to them and make them look the other way. As this is countered by needing less stuff it balances quite well.
Already you can get level 8 epic everything for everyone in your party before the last battle if you are prepared to plan, wait and so on. I don't agree with making it easier and (assuming you are playing for the first time) realizing you can only pickpocket once adds some extra variables to your game plan.