I was told by an extremely unreliable friend that if you let the Argonian go, they later come back and repay you with money.
I am not sure about the validity of this quote, as it is infact a Khajiit.
On another thought, do you think you can pickpocket the hoods off of their heads if you have enough pickpocket?
By the way, I killed the French guy as soon as he spoke for the reason of being french.
I am pretty sure thats the thief, because nords are cool and therefore not french.
Sadly, i had just learned fire rune but did not know what it did so before i killed the french guy with an arrow, i put a fire rune i nfront of him. he fell on the fire rune and it killed all of the other hostages.....