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 second this. Because of stat inflation, a full set of really good lvl 17 gear will feel like paper mache against lvl 19 enemies.
As for difficulty, I felt the 1st Act was incredibly well balanced, but Act 2 and 3 were pieces of cake, but then Act 4 jumped up and slapped me more than once. It was frustrating to have my entire party de-armored and crippled in a single hit in several Act 4 fights, especially the fights I didn't see coming, but it was also kind of refreshing.
