OK, I am infuriated. After dozens of saves learning the mechanics, I found a reliable way to steal the +1 Breastplate in Dammons shop. Took my druid, went Cat mode, and meowed to change the guard's sight cones. Astarion was already positioned near the item. As soon as the sight cones are pointed away from me I hide. IMMEDIATELY Dammar turns around and is aware of my hiding. There is no red sight cone anywhere near me. I don't recall the act of hiding making any noise, am I wrong? Very frustrating...

I think some NPC are just programmed to look a certain direction. Have you tried changing to turn based mode? That way you have some time to try and pull your steal off while the npc might not immediately snap back in position.

This NPC moves around his shop and frequently changes direction. He immediate detects you by some unseen mechanism, even though he is facing away from me. Yes I have tried turn-based mode. He does not wait for his turn, he swivels in place immediately. When his turn comes, he immediately triggers a detection/arrest. Try it.

Option 1. Used turn based mode. Locks NPC so you can reliably do your sneaky stuff.
Option 2. Talk to NPC w/another character. While in dialogue, use the button on the bottom left to change characters and switch to your thief. NPC will lock their orientation when in dialogue.

you are not wrong the entire stealing system was changed after EA for release... there are still work arounds but the guards now "know" it was you by default

I did some more testing, and this has happened in multiple areas with multiple NPCs, and it's much more clear cut now: even if a level 1 NPC is facing 180 degrees away from me, and the lighting is dim (half sun), he instantly alerts on me the moment I touch a chest, breastplate, etc. Is it possible these items make noise, like the latch on a chest or the clink of a large piece of armor? It can't be the lighting, because they are facing directly away from me, right?

Very possible it is noise. On the loading screen, one of the tips I often see talks about this and using the Hide spell to quiet yourself.

Deleted, realised it's a spoiler

Cast silence with the item in the area. That will difinitively prove it one way or another.

TLDR
I did it only with invis potion, hiding and sending item to camp.


you could prepare a fog spell to block the guard's line of sight (he's on the high ground where the kid stole some dude's mother's locket) cast it near you, not on top of him or the vendor.

send the thief alone, Invisibility potion or spell, hide, steal, immediately send the item to other character or camp. Or theleport to camp, via the map or context menu or whatever.

You will be busted no matter what but the item wont be in your inventory. ONLY THE SUSPICIOUS CHARACTER gets interrogated, only once, after you bail out either via persuation or the fact you DONT have the item, it will be fine, afterwards you can stroll around with the armor on safely.