Sneaking should be much more important and influential, and getting caught stealing should incur a prison time that costs actual XP *and* gold.
Um, no. XP penalties would be absolutely devastating in this game, and utterly circumvented by savescumming anyway. There shouldn't be harsher penalties for failing; it should simply be more difficult to succeed.
So here's an idea: let's say your average civilian notices a painting literally disappearing into thin air. Logically, he deduces an invisible thief. What do you do when you see an invisible thief? You summon someone you trust who can detect invisible people, obviously. This is a magic-based setting after all.
For these reasons, I think the Burn My Eyes skill should allow both players and NPCs to "see" invisible characters. This is something the players could use too (such as that one fight by the campfire). However, when an NPC detects an invisible thief, they just don't summon the guard; they also summon the local pyromancer.
So in Cyseal, handling the occasional invisible criminal might be something Arhu does (he works in the same building as Aureus, after all, so they've worked out some kind of arrangement). So what would likely happen is some guards would be dispatched along with Arhu, and you'd have to choose between going to prison or fighting them.
Throughout the game, the theme would be "Pyromancer = sees invisibility." Essentially, these enemies would have Burn My Eyes up at all times. I don't mean just any fire-themed enemy, I mean someone who is a dedicated spellcaster (usually holding a staff) and uses fire magic. There aren't a lot of them, but essentially every town has at least one, so it would be the occasional thing for invisibility characters to worry about. If the mouse over an enemy in the distance and see the Burn My Eyes status, time to come up with a new plan.
If you do manage to take out the town pyromancer, it will probably have a detrimental effect on your ability to purchase fire-based skillbooks, but it would come pretty close to giving you free reign of the town. Kill Arhu, and he can't help out anymore. If that's something you're okay with, then you can go back to using invisibility it pretty much the same way you can use it now, to steal everything with ease. After all, you did win a boss battle of sorts, so you kind of deserve it.
