No, you're missing my point, the "cosmetic" cameleon spell is there just for it to make sense that they can't see you. Not to make me further invisible to them than i already am.
This is just a thought i had about stealth skill being unrealistic because you can be in the face of your enemies without them seeing you. My idea is that when you crouch the stealthskill should apply a cosmetic cameleon spell that makes you partially invisible. The transparancy should depend on your stealth skill.