I think there's a lot of potential here! I like the aesthetic and music! And it's an interesting concept. I think it would be helpful when you've activated stealing from someone to change the screen from the main gameplay screen to maybe a small animated cutscene of the squirrel looking like it's in their pocket or something, that way you're not still moving while hitting the keys and it's very clear that the mechanics have shifted.
I noticed in your design doc that your target audience is ages 10+, so it occurred to me that this format would make for a good typing game as well. Like maybe when you're stealing something a word appears on the screen for what's being stolen and you have to type out the object name in time to successfully steal it.
Just a few ideas I had while playing, I can't wait to see it again next week! Good luck!