That's not true. At grandmaster you have a 100% chance to succeed at stealing. You succeed most of the time at master, though some stores are harder than others.
Stealing can be a good way to acquire decent equipment early on. Even later on it can be useful to steal those master and grandmaster spell books that cost so much, especially if you have several spellcasters.
Finally, it can be just about roleplaying.

If you have a thief in your party, then giving him expert stealing and expert disarm early on can be very useful, as well as good RP.

That's odd, I could never get the stealing skill to work until Might and Magic VIII came out. I know that before I installed any of the patches, I never successfully stole anything in Might and Magic VII

I can't seem to steal from shops in Might and Magic VII. I can steal from people on the street just fine, but whenever I ctrl+click an item in a shop, I just end up buying it instead. My stealing is master now, but I can't even swipe a bottle from the alchemist without this happening. Is the mechanic different for in stores versus from people, is it a bug, or is that just how the game registers a failed steal attempt?

If you have a failed attempt, I'm pretty sure you get banned from the store. I think the issue must be somewhere else.

How come the merchants know items are stolen? (Haven't tried this myself) Even if you attempt to sell those items on other side of the world map far away from where they were actually stolen? What, do they have some kind of watermark on them? That doesn't make any sense.

It's a good mechanism, if a bit unrealistic, to keep players from getting rich too quickly. A similar system exists in Oblivion, for example. Only fences will buy stolen stuff. You can still wield/wear/drink them!

an old topic but useful. Stealing is one of the worst skillsin MM7. It is only useful maybe the first town or 2 quests where you can steal the items instead of paying, when you have no money. Later on, you have almost endless amounts of money with nothing to spend it on, so stealing is useless you can just buy anything. Even before I started working on GM quests when my skills approached 10+, I had like 750,000 money and absolutely nothing to spend it on. Once I hit GM magic I could buy some of the GM books, but that's it. You really don't buy gear from the stores because only a couple stores sell top line gear, same with magic items, etc.

Most of the time you are just save/reloading with ore to get nice items, you rarely have anything to spend with your money it just keeps piling up. So stealing? a worthless skill except early on to do a few quests when you don't have money. Other than that, about worthless. There are no special god items that require stealing only. Just buy them, or find them.

It's a garbage skill. Thieves/rogues in MM7 are underpowered crap (think of them as a nerfed knight/monk). As a rebalance, they should have master level bow skill and expert elemental skills to make them something resembling relevant later on.

As a matter of game design, skill viability, and balance, the skill should be redesigned as:
Normal - Normal skill effect - no special bonuses.
Expert - Double effect of skill. Whenever you succeed, do another skill check (as if your party was attempting to swipe the same item again). If successful, your reputation doesn't decrease. The difficulty of the skill check increases based on the number of items swiped from the current restock (expect your reputation to decrease if you routinely clean out every store on the map, even as a grandmaster)
Master - Triple effect of skill. If the Expert-level skill check succeeds, the item isn't marked as unsellable.
Grandmaster - 100% success. Quadruple effect of skill on the additional skill check.

If you get caught, your party gets fined and blocked from using the shop until the next respawn (?). Visiting a monarch in a castle while you have outstanding fines gets your party jailed for a year.

Even if you're 100% successful, it's garbage anyway because it trashes your party's reputation and you will end up paying more gold for goods and services than you saved except if you have a grandmaster merchant. Unlike most similar games, Might and Magic doesn't have designated fences to sell your party's ill-gotten items.

Fortunately, Might and Magic 7 offers plenty of other opportunities to make insane amounts of gold, particularly in the late game.

I do, however, like them for GM Disarm and Dagger, especially Disarm, which is the main reason I will use one (esp. for the Haunted Mansion, in particular).

actually thieves aren't underpowered in mm7, they are pretty tough front line fighters with thief abilities, just that stealing isn't one of those abilities that are useful.

Basically with daggers, all your skill points will after you get 10 in disarm, are going into your daggers, which add to your hit and damage, plus the main bonus, Your skill level chance to do 3x critical hits. 30 dagger skill? That's 30% each hit to do 3x damage. My thief often equals my warrior easily in terms of damage when he gets higher level in daggers, so thieves aren't underpowered in MM7, they are pretty good on the melee front line. Duel sword welding warrior, yep does great, but a dual dagger welding thief does just as good. They don't have high armsmaster skill to boost damage, but their 3x critical hits do factor into their melee ability.

Being able to GM leather also adds into their defense, making them a bit tougher than some of the other class's who can't GM their armor to any extent (clerics, sorcerers, etc). Backed up with buffing spells, thieves easily hold their own in terms of damage in melee with other melee characters.

I got it for roleplaying purposes because I thought it would be harder to come by good equipment or real money like in MM6.

Boooy... was I wrong, it was nice for the first 4 levels then I just ended up rich and with lots of equipment. So stealing isn't that useful at all.

Earth Mage and dare I say...Fire Magic are completely useless as well.

Also, some guy made a statement that getting over 100 armor class is pointless because of diminishing returns in terms of damage reduction.

Getting 100 armor class isn't that hard with some enchanted rings and expert leather (just to eliminate the recovery penalty). The speed stat also increases armor class. So the shield skill is kinda pointless. Also, the resistance boost from GM leather seems appealing but remind yourself that any enchanted item with "of protection" gives +10 to all resistances for 0 skill points. So you can realistically use Leather Armor on every character and still survive.

That said, The 1/2 damage from physical attacks granted from Plate is a huge deal.

However, the game isn't too hard so anyone with 1 sorcerer, 1 cleric and 2 of anything else can realistically beat the game. The Quickstart party is perfectly fine.

High skill level of Incinerate and Inferno (to blow through low level dungeons) are really cool spells to use. Also it keeps increasing length of Haste spell, and it usually lasts longer than similar buff from Hour of Power, and irreplaceable if you choose Dark Path (as well as Torch Light in this case).
He was wrong. You get same benefits from 1 point of AC with 50 AC as with 500 AC. The benefits aren't linear. It isn't direct damage reduction, it is chance to avoid physical damage, and it depends on level of creature which attacks you.

In any case it doesn't matter that much, because you can play this game anyway you want as game doesn't limit character progress as much as in other games. E.g., I was raising Diplomacy in MM6 just for the heck of it because I didn't like to see skill point leftovers after training :)

While not useless this skill is not useless either. It is particularly useful to speedrunners who steal Tolberti's box instead of killing him. Something useful even for those who don't have a cleric in party as the fight with him or his counterpart on the other path results in incinerated party members without GM magic protection.

Also invisibility drastically decreases your chances of being caught.