I did visit the brothel, purely for the experience points and to completed the quest, but did not get a reputation drop. Even after freeing Penumbra and returning to the brothel for 'special treatment' I received experience, but the only thing I lost was most of my hit points. <img src="/ubbthreads/images/graemlins/badsmile2.gif" alt="" />
Did you return to the Ducal inn and talk to the two guys looking for the tarts?
Heros don't steal everything that isn't nailed down or lie to their supposed true love, but that never stopped me from getting loot or completing a quest. The game only applies a reputation drop to stealing if you get caught, so the brothel should be safe (who's going to call the guards on you?).
