The mayor of Generic Fantasytown wants a means to monitor his town (population 4,000, perhaps 1 mi. (1.64 km) square). The townsfolk are cowed and submissive, fearing their mayor but fearing even more another horrible attack like the most recent one. The mayor has convinced the townsfolk that such monitoring is in their best interests.
The campaign is a sandbox, with plots running in the background while PCs pursue plots that interest them. It's possible for PCs while they're low level to encounter the mayor, kill him, and end the plot in its infancy… or for the PCs to encounter him during the endgame at level 20 when he's applied his plot to a planar metropolis… or an entire plane. I expect that when the PCs are levels 8-12 (but depending on the item or spells necessary for the plan this could be far different) the mayor's middle game–Generic Fantasytown and the secret police–could be fully realized and the stage set for further expansion.
I'm imagining a Generic Fantasytown monitoring room full of mirrors–like contemporary video screens–showing the activities occurring all over town, and an elite strike team employing teleportation magic that responds when a townsfolk steals a riding dog, looks suspicious, or litters. This, however, is impossible given the town's resources, either because of population (e.g. the 6th-level Sor/Wiz spell scry location [div] (Complete Scoundrel 102) requires too many high-level casters all operating simultaneously) or expense (e.g. ring gates at every corner cost way too much).
I'd like the mayor's system–because it helps recreate some classic contemporary plots in the fantasy genre–to require monitoring instead of, for example, casting 4,000 times the spell mark of justice or having each townsfolk sign a contract of Nepthas. (Not that those don't also create interesting plots.)
Is there a cheap magic item that can be bought in bulk to facilitate this? A single, impressive magic item that the mayor can have made, or perhaps an artifact he can discover? Or is there a 3rd-level or lower spell that can do something similar to this that will monitor the town if used by 40 magicians (i.e. 1% of the town's population)? A single spell of any level (except epic) that will do the same?