After spending all of 20 minutes thinking of ideas to improve the sad state of lockpicking, I came up with the following. Suggestions are welcome. I'm also interested in finding out if anyone sees any of these concepts that would be difficult or impossible to perform because of engine limitations or the like.

1. Increase minigame difficulty by increasing the chance to break a pick based on skill level.
2. Add the ability to bash locked doors, and an unlock spell for mages, "melt lock". Give the AI the ability to use these techniques, or an AI-friendly script that simulates the use of the abilities.
3. Add a progress bar for unlock attempts; if you try to pick a lock, it should take 10 seconds in-game, as well as making some noise during that time period.
4. Add traps to locks.
5. Add new perks to lockpicking. See below for initial ideas.
6. Repopulate chests in various locations to be worth stealing from, and dynamic. A rich noble should have a lockbox containing valuable items. If you break into his home, it should eventually respawn and increase in lock level/get trapped/spawn a guard nearby for each attempt.



Lockpicking Perk Tree concept:


Novice-> Danger Sense- Able to detect traps (1) -> Steely Nerves- Able to disarm traps (1)
Apprentice-> Silent Hands- New name for Quick Hands (1) -> Wax Key (1)
Adept-> Swift Hands- Picking locks is 1/3/6 seconds faster (3)
Expert-> Discerning Eye- Able to find false bottoms and hidden compartments in locked containers [Golden Touch and Treasure Hunter] (2) -> Steady Hands- Able to remove disarmed or discharged traps (Discharged gives trap components, rather than a ready trap) (1)
Master -> Locksmith- Locked doors gain 15/30/50% durability to bash attempts (3)

Novice, Apprentice, Adept, Expert and Master, in addition to making each tier of lock easier to pick, would allow you to relock doors at that level of skill.

Any more ideas or feedback?