If it\'s hidden (i.e. in a backpack or other container), the NPCs shouldn\'t be able to tell what it is. On the other hand if you\'re stupid and you take out that greek fire and pour it on the street, the guards are going to notice. And I agree; in two months of playing the-game-that-shall-not-be-named, i could kill the guards in one hit.
Let\'s make these guards equivalent to level eighty characters with top notch gear and make it so that they travel in patrol groups of 3-5.

As far as prices go; they will be EXTREMELY high, simply because it is illegal. There\'s a lot of risk being involved in producing, smuggling, and even selling the items. Maybe we could implement a reward system for players assisting the NPCs in finding dealerships for these items.
Help take a bite out o\' crime -- ARR!