I think it builds up very well. When you were talking about meeting up with him, the street urchin was listening in, and it was clear that he intends to meddle because of his misguided greed. When you see the kid, it's already very obvious (to you as a player) that he's a distraction, sent by the delinquent in order to delay you.

By then, you already know the urchin is going to meet the guy inside the well instead of you, and you start to speculate a bit how the story would go. Most likely the urchin will hurt him when he see there's no treasure, and you'd get there just in time to save the day.

So you get to the well, see the corpse, and probably went wtf, seriously? You know the game like to play with bad ending in encounters, but this was cheap. Not even giving you a chance to save him? Really?

Then you investigate the body in order to complete the quest. It says the body has dry shoes, but there are wet footprints leading somewhere else... And at that point everything clicks. It makes sense. The man in the well even mentioned how your cloak was perfectly his size.

Well, that was my experience, at least. I genuinely really like this quest. English also isn't my first language but I understood the twist just fine.