Izzy, the stealing part isn't godmodding .. the "assuming you aren't noticed, carrying a pile of stolen goods through a busy city and then selling those goods" part is what I call godmodding.

I also have a very hard time believing that not a single player passed through east hydlaa during that whole time you guys were there. Even if it's true, NPCs are also witnesses as pointed out by others before me.
Sov, I didn't assume a bug was involved here. I merely asked a question to make you all think about the possibility. If you already had before I asked the question, good for you!
Secondly, even if there is nobody there: Picking up and moving large quantities of goods makes a lot of noise. A lot of noise raises suspicion. Shady looking people walking around with a ton of goods raise suspicion .. especially in medieval times. Shady looking people selling loads of equipment raise a lot of suspicion. Large stashes of equipment, with specific crafter marks on them can be tracked. Honest or wimpy NPC merchants will tell on you when the guards ask questions. I'm willing to bet that most characters involved are known to hang out a lot on the 'wrong side of town'. All this helps lead to the almost-fact that you aren't just going to get away with it.
Thirdly, when things from someone are being taken, that someone is involved. It doesn't matter if they were online at that time or not. They're involved.
Fourthly, thank you for making my point! You did it to steal, not to teach someone a lesson.
It saddens me that you fail to see my point but maybe that's my fault so I'll say it very simple.
Keep things fun, even when you're evil! If you know for certain that people will be pissed, then don't do what you're about to do.