I decided I was going to get my pickpocket skill up to 100 and get the perfect touch perk so I could grab some unique items for my collection. (Too bad I can't pickpocket Tullius's armor!) Once I got my skill to 90 through the use of a trainer I used the OI to get it to 95. Then I read three skill books to get it to 98. Only two more to go!

So to get those final two points I went to various bandit camps and snuck around pickpocketing their weapons. What was weird is that the weapons I stole off them were marked as stolen. But of course, if I had just MURDERED them I could have taken them off their corpse and everything would have been copestic.

Murdering a bandit is hunkey-dorey, but STEAL from them and your crime stats get incremented. Bizarre.

Well it is stolen property. The owner might go to the guards to report it as missing I guess

It's marked as stolen because you stole it from them.
If you kill them then it is just loot found.

Anything you steel from anyone in the game gets marked as stolen.
Bandits are bad guys,you can kill them without getting a murder charge.

I don't see how a bandit can report stolen property before being accused of stealing said property in the first place.

Stolen items should've been cleared of their stolen flag once the owner is dead, or after some time has passed, or undetected as stolen flag after certain range from the owner

The logic behind current system actually kind of has merit for unique items, but considering the technology available (how do they know something is stolen and not bought or found?), it's certainly leaves much to be desired

Yep pretty much. How do the guards know this iron dagger is stolen when it looks like every other iron dagger?