Lord Ulbrec has a ring of protection +1, ulbrec's wife also has a few spells I think mage armor and ice dagger, the two priest in the tent have about 6 VERY nice clerical scrools inluding Holy Blight, their is a guy passed out in the tent who has about a 1000 gold worth of gems on him and a note for a sidequest which is always the last thing pickpocketed (he's a clairvoyaint)...that might be all the good stuff in Targos...if you include the stuff mentioned above. And yes, you can get the +2 dagger even if you pickpocket the +1 dagger b/c it takes a masterwork dagger to make a magical item (which she also has on or did in my game).
Oh, and trust me on this, but before you leave the underdark, kill all the underdark merchants...their badguys anyway so it won't hurt your paladins none.
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Vae Victus!
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