That's right....You only get arrested if you either A) Kill the Iron Throne dudes, and then take a staircase, or B) Go up to the 6th floor and let the Gatewarden talk to you. If you're REALLY good with your Thief, you can do some really outrageous things here, like pickpocketing Ulraunt. (I Saved and Reloaded a lot here.) On one of my "Let's-do-this-and-see-what-happens" tries, I killed the Gatewarden with arrows (-10 Rep), to keep him from talking to me. Funny thing was, Telthoril saw the whole thing, and he didn't turn hostile. Puzzled, I went over to ask him about this. His response? "I am very proud of you....as I am sure Gorion is."
Ha ha HAAAAAA!
------------------
"How do you define 'fool?'"
"I don't attempt to. I wait for examples. They inevitably surpass my imagination."