My biggest complaint about the stealth system is the inability to 'break' being revealed at low levels. Once you're found, you should be able to still slip back into 'hidden but under scrutiny' and require them to re-establish audio/visual confirmation of the player's actual location.
The other problem is with the AI - even if it can't detect you, but can get a ping on your general location, it should try taking a few 'stabs in the dark' (Any chaos caused by them stabbing their buddies is a perk, not a flaw) that may or may not hit your character if you're hidden well enough - at least at max level. Another problem is the voice files - NPCs giving up the search isn't a problem. Denying the events is the problem - "Must be my imagination" works for sound detection - but if they find an object/see their buddy get killed, they should panic, look around, and, if they don't find anything, the response should be "I hope it's gone", then go about reacting to their slain buddy (Read: checking him, going through his pockets for loose change, and promising to take care of the body later), not "Must be my imagination"
I don't mind "Stupidity" in the AI, such as simplified/incomplete search patterns that allow a somewhat bad-at-stealth player to recover from accidentally blowing his cover, or NPCs that can be distracted and run on a merry fox chase through misdirection.
Slitting their throat/impaling their head implies you manage to strike exactly where you want to/penetrate the skull/armor with a single blow (instead of have the dagger glance off and 'merely' half-scalp them), or actually manage to slit the throat - it is harder to actually do than most people realize. And while almost always a death sentence, a slit throat still takes time for the person to bleed out or suffocate - it's not an instant-death attack.