No, NPCs should still detect missing items, and look for the thief in the immediate vicinity. There is a time limit on that, though, so if you make a clean getaway, you won't be challenged if you return some time later.
If you start a new game, recruit the Red Prince, head to the front gate, take the ladder up and Pickpocket Yarrow, for example, there should be an overhead text comment when she realizes items missing, and she should confront the character.
