I need your help to determine whether something is an exploit or not:

The supposed exploit:
* In one of the towns, there is a place where magic doesn't work (IIRC), and you can find an Emerald Ring there. However, once you leave, the game will confiscate the ring and throw you into prison for a year.
* You can, however, keep the ring by giving it to a hireling, and then dismissing the hireling while in the area; doing so will prevent the game from seeing that you have the ring, allowing you to keep it. Hire the character again, and they'll have the ring in their inventory.

The reason this might not be an exploit (spoilers lie here):
* Once you get the Elemental Orb, when you try to leave the dungeon you find it in, you get the message "The Orb denies you exit!" (or something like that).
* Furthermore, Town Portal and Lloyd's Beacon don't work in this dungeon.
* The only way to keep this item is to use the same trick I mentioned above; give the item to a hireling, then dismiss them.
* Unlike the Emerald Ring, the Elemental Orb it a major quest item, and it is needed to trigger an event not in the dungeon; hence it is clearly intended to be taken out.

So, exploit or not?

I found the same trick when I played through. I would say it's not an exploit for exactly the same reason you described above with the Elemental Orb.

From memory, the Emerald Ring is a nice item but not game-breaking (+15 AC I think?)

Yes, +15 AC, easily boostable to +20 with Enchant Item (a certain fountain gives you 200 SP, which is enough to get items to +5 without having to rest), and no as-item effect (so you can't use an exploit I found to make it permanent).