The "HARMLESS" trait says that it only allows walking, peeking, and observing guards.
Presumably walking while dragging a body is not differentiated from normal walking, since guards were not alerted to my unit dragging a body. Dropping the body compromised the status, as expected.
Not sure if this is intentional, but it's certainly odd.

I haven't done extensive testing, but I would imagine similar behavior occurring regardless of status.