As a cache owner, you are responsible. Especially with urban caches, it's easy for a cache to be confused with something else. And, with all the possibilities of someone watching, someone finding the cache could be perceived as suspicious.
One of the most responsible things an urban hider could do is inform the local law enforcement about Geocaching. It could be to everyone's advantage to know where these caches are.
I've also come to the opinion that one of the most irresponsible things a cache finder can do is be stealthy. IMO it attracts more attention than just going after it, and explaining to anyone that catches you doing so what caching is. This is not an underground activity; it is not illegal. So why do we try and be so secrative? When a cache in is view of businesses and homes, you have no way of knowing who is watching, so there is always risk there.
You cannot blame anyone but the cache hider when things like this happen. I'm not saying that this or other caches were not placed with reasonable care and safety in mind. But it belongs to the cache owner, and you can be held accountable in these situations.
As far as caches being muggled, that is an unfortunate aspect of the game.
From the Geocaching.com
Cache Listing Requirements / Guidelines