There is a delay. I'm not sure what the exact time is. When you turn over an item to its owner, he does not instantly disappear.
Of course, I was horrified at this mechanic. People who got their items back blinked out of existence, so I was, in essence, helping people get killed.
Way to go, developers. You could 'a' just used existing townspeople, and not killed them when they got their stuff back, so they could live to be losers again.
...and you have to wonder why so many human townies own gargoyle items. Are they spies for Ter Mur? IS THERE GOING TO BE AN INVASION? Are we already invaded and just not know it yet!??