I figured this would be helpful to people like myself who decided to play the game in custom mode, on Master difficulty, and want to get every collectable along the way as well. After about an hour or 2 of trial and error, I finally found a method that worked, but before I go into that, I need to talk about the General's pattern. To do this you will need a flash bomb and at least 1 water arrow (there is a water arrow in the room you can grab as well.
As soon as the encounter starts, the general will just be shooting to your right, this happens every single time without fail. He will spend the rest of his time just wandering around the center of the room, while staying in the light, trying to search for you.
To escape the room you need to turn 2 valves on either side of the room which removes the "gates" that are blocking the door you need to go through to escape. After you completely turn the first valve, the General will stand in the center of the room, and start to shoot at the wall opposite the door you need to escape from, and slowly turn right or left as he continues shooting, the direction he turns seems to be random (he will do this every time without fail). After you turn the 2nd valve, he will start wandering around inside the shadows, looking for you.
You can not pick pocket him at all without being detected, which will result in an instant failure, but you can sneak up behind him and hit him with RB, and you can also stun him for about 2-3 seconds with a flash bomb, so taking all of that into account, I came up with this method.
#1. At the very start of the encounter, just swoop towards the valve on your left, and start turning it, but don't turn it all the way like you normally would, just turn it about 90% of the way (use your best judgment) so that it doesn't completely open the gate/activate the General's A.I. path which makes him stand in the center of the room and shoot the back wall.
#2. Shoot a water arrow at the torch that is above the door you need to escape from, (this way he won't see you move to the next valve, and won't see you later when you have to lock pick the door) then swoop over to the next valve, and turn it all the way. You will now see the General start to make his way to the center of the room, as he is doing this, swoop around and behind him so that you're slightly to his right, now slowly walk up to him as he is shooting, if you walk too fast he will immediately turn around and spot you.
#3. Once you're behind him, hit him with the Right Bumper, it'll play an animation of you kicking his shitty kneecap, then he will turn around and push you away, once you get control of your character back, you have about 5 seconds where the General will be stunned.
#4. Swoop behind him, and grab the pouch in the middle, the pouches on his sides only have gold, the one in the middle has the collectible. After you grab the collectable, immediately throw down a flash bomb to stun him for a couple more seconds, and swoop back into the shadows. It is possible to do this without the flash bomb, but it is very inconsistent. After he has been stunned, he will continue shooting the back of the room as if he were uninterrupted.
#5. Now just go and turn the first valve the rest of the way, which will completely open the gate. Go to the door and pick the locks, it is one of the tougher doors to unlock, as it has 5 very sensitive pins you need to set. Just take your time, and pick them all. He never even came close to seeing me while I was picking the lock, because I had shot the fire out prior to doing so, and he only seemed to navigate the left and right sides of the room. After you pick the lock just open the door and walk through.
Alternatively you can probably bring a lot of blast and fire arrows, and get his health low, and he will become stunned once his health is low enough, at which point I assume you can just walk up to him and pick his pocket no problem, but all I had was one fire arrow, one water arrow, one flash bomb, six blunts, and a pocket full of dreams.
I hope this helps someone out there, I had my custom challenges set to what the achievement guide recommended, which really limits what you can do, in case anyone was wondering.
Good Tidings and lollipops,