I think stealth just needs to be less binary. You should be able to break stealth with scan and with listen, maybe even be able to 'watch shadow' which puts you on alert for people sneaking around, at a large penalty to your stun.
Part of the issue is how binary the code is. If I don't have skinning, and I have a pile of bone lengths, I can't for the life of me figure out how to separate them into short and long lengths. Similarly, if someone is sneaking around like a ninja, if my PC does not have scan (but has listen), I will never be able to find that sneaky person. The fact that Invisibility is just as easily seen by someone with (master) scan as someone who is hiding points out something is a bit off to me.
I would say Stealth Code is one of the last bastions of old DIKU code that I would love to see updated to be more realistic for both sides.
For instance, they were working on hiding in barrels/crates/chests for Armageddon Reborn. That would be a nice route to take for hiding in general -- Finding objects to hide in or behind, or having to 'hide crowd' for the city rooms. Adding 'search' to all characters, and it allows them to search the room for hiding spots. So on a crowded street, you might see a 'pavilion' object, and you can 'hide pavilion' to hide behind it. Or, there might be a half-giant soldier you can attempt to hide behind, which only masters would be able to pull off. There could be modifiers added that make it harder or easier to hide. 'hide in barrel' as opposed to 'hide behind barrel', or 'hide behind pavilion' versus 'hide above pavilion'. Climb and Sneak could come into play as modifiers for perceived success.
On the converse, if someone thinks someone is hiding in a person's chest of drawers in their apartment, they can 'search chest' and see if there is a person in it, or behind it, or above it, or below it. They could search the room for shadows (search room), and depending on their listen/scan/search skill, it will yield something or nothing. Perhaps add a timer to the search skill with a specific object or room, so if someone searched it already, they can't do so again for X amount of time. Allowing both sides to utilize 'search' in this fashion I think is a win for both sides.