I have three (or maybe actually 12, depending on how do you read it) ranks in Persuasion, and a technological Persuasion buff, but there seems to be no way to convince the guy to give away the Water Gem.

How much Persuasion do I need, and/or how do I direct the conversation to do that?

Needless to say, SPOILERS AHEAD.

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IIRC, three ranks in Persuasion ought to be enough; it's been a while since I've bothered doing this one.

The beauty of this game is that there are multiple approaches. If you can't convince him that his technological bent is best applied elsewhere than in literally an entire town full of wizards, then just pick the gem out of his pocket... or off of his corpse.

I had two spare Character Points (waiting for the Velorien's blessing, when I'd have enough Dexterity to max Pick locks and... something, I don't remember what I was planning to do with the second one), so experimented with it myself after saving a game - three ranks didn't do the job, but four did (maybe it also depends on Charisma, and that's why three ranks worked for you?).

As for pickpocketing or killing him, I didn't have enough ranks in pickpocket to steal the gem (they were waiting for the blessing as well), and fighting him got all my good followers to throw a fit (also considering the attitudes of majority of mages inside, I'd sooner want to kill them, than him :P ).

Anyway, I got the blessing now, and so I'm now off to finish various remaining quests etc, instead of saving the world, the Big Bad will wait until I get there, anyway. Well, probably, but seeing as I'm on it for eight in game years (really, started as 15 years old half-orc, now I'm 23) and he's still sitting where he is (avoiding spoilers), I will probably be fine. :)
So I will get back to that quest, eventually. The guy can camp in front of Tulla for a couple more weeks or monhs, I guess.

I'm kind of tempted to spend enough in game years for a half-orc to die of old age and see if that happens, but no idea what would I be doing for so long a time (probably get bored out of my mind and quit or finish the game anyway :P ). And it probably wouldn't happen anyway.

But I presume you had at least one Fate point? You can use it to guarantee success at picking pockets, even without any skill. I do so all the time, in order to obtain both Throwing mastery and the Throwing master's weapon. You're right in that nothing would happen; the devs never expected anything to ever come of it, and so didn't program anything into the game. (Things might've been different, if they hadn't been so rushed near the end; but we'll never know.) It's the same reason you can spend weeks and months walking back and forth across the continent, and yet the main quest points all happen just when you show up.

Yeah, I forgot about Fate Points. Though I'd probably prefer to save them for things that I want to steal right now and can't (or don't want to) put away for until later, or maybe just to heal me when fighting the Big Bad, if that will be needed.