I knew that paragraph would be unpopular. Seems a little evil forcing the player to choose between what were essentially the 2 most popular guilds in Oblivion, especially when they make use of the same skills but then thats what makes the choice so interesting, if every choice was easy to make then why offer a choice at all?
I know how the thieves guild quests were handled in Morrowind and yes you could kill people on certain jobs with few consequences however to be fair it was only the last 2 missions that actually required you to kill people, besides I like the new no killing policy introduced in Oblivion. As Armand says "you are Thieves not Murderers", if you need to kill someone to pull of a heist then you can consider the job botched, that being said do you really think that you can trust a member of the Dark Brotherhood to swipe the goods and resist the temptation to slit the throat of the beautiful Altmer maiden sleeping peacefully and smearing her entrails along the walls?
Many of the later quests let you kill people with no guild sanctions. For the other special jobs yes it makes sense, the guild don't want you to kill lots of guards or people in palaces as it would draw unwanted attention.
The people of Tamriel are surprisingly good judges of character, ever talk to a guard and he gives you the spiel about how he can tell you are a murderer from the look in your eyes? Or ever had a townsperson come up just to tell you that you are a sneaky looking sort? They can even tell that you are a master of conjuration by the way you smell and I am sure that those running the thieves guild would sense something isnt right about that murderous twitch in your eye.
Think it will be plenty of rumours that you are the thief guild leader, the guards knew Armand was a high ranking thief guild member and he had to go into hiding in two quests.
As in real life people know or at least suspect that you are a criminal but need to catch you doing something illegal.
Found it fitting that the thief guild had gave higher infamy than the dark brotherhood as it's less secret.