Personally, I'm for stealing everything that's not nailed down. But maybe that's just cause I like to horde stuff.
I think that we should be able to steal any item a character is carrying within reason. So stealing their money, a potion, or even their weapon out of its scabbard would be great (if hard to do). Stealing their armour while they're wearing it... eh, not so much.
I also like being able to plant stuff on people as well.
I think the best example of stealing would be Arcanum.
You could take just about anything someone had that they weren't equipped with. And to get around that you could plant stuff in their inventory in the hopes of them switching their gear around. Put a set of armour on someone and watch them switch out their old gear, which you can now take.
I definitely hope that PE has AT LEAST Arcanum's level of depth when it comes to stealing.
As for being caught, I think that should come down to who you're stealing from and your skills and relations with them.
A silver tongued character could fast talk their way out of too much trouble, though would still look a little bad. Someone without such a talent would simply be caught red handed and have to face the consequences.
However a peasant catching you will most likely run away. It's not like Bob the Farmer is going to attack the heavily armoured adventurer. They'd most likely tell you off and lock the door on you. A shopkeeper would be calling for the guards, not attacking you themselves... though a blacksmith might. Guards would beat you senseless for it, however I don't think they'd fight you to the death, that would be stupidly extreme. If you get caught, you get beat up and possibly locked up for it.
There should however be ways to rectifying the problem. Be it through "magical" fixing or doing something to make up for what you've done.