Yeah I always thought that to be kinda funny. Sakon steals the old lady's bag literally right in front of the guard, starts running around. Link shoots the bag with an arrow to make the said thief explode, then puts on a strange mask that transforms him into a Deku and tries to leave. The guard witnesses all of this, but the only thing he does is tells Link the outside is too dangerous for a kid, lol.
The Clock Town guards remind me of the guards at Swamp Castle in
Monty Python & the Holy Grail. They're instructed to keep the prince in the room but don't bat an eyelash when he's writing a distress letter and firing it out the window with an arrow, simply because they're only instruction was to prevent him from leaving the room, lol.
http://www.youtube.com/watch?v=JE9StK1HIos
Skip to about 5:30 if you wanna see the part I'm talking about.