I was away from the game for a longer time, but it would be strange if they changed it so that you cannot adjust difficulty, upwards at least. You can change from Classic to Tactician, but not back. At least I did it after the 1st act. It is in the game settings.
To pickpocket, I hardly think it broke your game. Your fantastic stuff will be garbage soon and you will seek for new items. The quick loss of item usefulness is one of the biggest complains in the game, as far as I see.
I pickpocketed two times in the game, once at level 4 and then in the mothers tree area in the 2nd act.
