A game like skyrim does it perfectly. You can steal anything that you want if you are so inclined, but are limited in what you can do with them, With many merchants not buying stolen goods for the example.
Actually, I consider that to be a very ridiculous thing about Skyrim.
Sure, it makes sense that I can rob someone's store clean and don't have the ability to sell my stolen stuff back to its rightful owner. But if I stole something in Riften, I should be able to sell it in Solitude.
But no, for some reason every merchant in Skyrim instantly knows that this wooden plate I stole is in fact stolen, like every worthless item in Skyrim has its owner's name engraved into it.
Fair point, though I wouldn't call it ridiculous tbh. Not perfect then, but pretty much the best system around imo. Skyrim gets a lot of stick now(seems to be cool for some reason), but it does a lot of things right and looking at how systems interact in those games, it is something that really should be given credit imo. In DOS, you have two elements- stealing and economy working fine on their own, totally separately, but there is no interaction between the two systems which there really should be if they are to compliment each other.
It is hard to see where the balance should be met in this game tbh, as it is not right atm and a little simplistic, but at the same time we don't want it made too tedious or overcomplicated like the crafting can be for example. As it is, it is functional, but barely.
Also, I agree that distracting someone whilst you steal/sneak whatever is very good. Had some great moments in my game. Combined with the teleporter pyramid thing it can be a really interesting feature - distract whilst your rogue sneaks upstairs or wherever, then stop the conversation and teleport to them...done it once where there turned out to be a fight in a cellar I was sneaking in and I was able to teleport my whole group in to even it up. It was great!