I've got guard sight adjusted in a way that seems reasonable. It does make play easier so I'll have to see whether it's worth keeping.
My goal was to try and soften the boundary between sneaking around unseen and being spotted (and chased) by the guards. At first I tried having two threshold distances for being spotted. At the far distance guards would become suspicious; at the near distance they would give chase.
This only gave warning that you were about to be spotted some of the time. If you walked around a corner within range of a guard you'd be spotted instantly.
My current version softens detection in time rather than distance. The first turn that a guard sees you he goes into a suspicious state. This causes him to say something like “What's that?” If he doesn't see you on the next two turns he'll return to patrolling. Otherwise he switches into his chase state.
You have a lot more leeway to maneuver with this system. So long as you have shadows nearby you can always duck back into them to escape detection. I'll need to implement a bunch of the rest of the game features before deciding whether it's too easy.
I've finally started on hearing as well. It's pretty much like sight except that guards can hear in all directions in all lighting. It's not great yet; I'll need to do a few experiments to figure out what works best.