Not only are the guards psychic, each and every NPC seems to possess the mystical ability of divining what is happening meanwhile, elsewhere. For example, being caught while pickpocketing the spying magister up on the cliff next to the Rallying Point will cause the Seekers to rally up in arms in indignation; how dare this Sourcerer steal from a Magister? They were, of course, in telepathical communication with the spying magister and simply couldn't accept theft on moral grounds, so I guess they became allies then.
Really, though, the system doesn't seem to work based on visual detection but rather a series of code flags that go off independent of line of sight or any other *intuitive* gameplay mechanics.
