One of my players is playing an 18th level ninja-type, and he's got Hide in Plain Sight and an incredibly high Hide bonus. Add to that that he has skill mastery in Hide, so that he can take 10 at any time, and he is, by default, hiding with a check of 46 (that's including the -20 penalty just in case he's running). And it's better than being improved invisible, because it can't be dispelled, and see invisibility won't work. I suppose glitterdust would counter it, and I'd probably rule that True Seeing revealed the person.
This is a little troubling to me, but he is 18th level, and we've got a sorceror in the party tossing of Time Stops like popcorn, so all in all I suppose it fits in with being high-level.
The "must be some sort of shadow within 10 feet" thing is, in my opinion, so broad as to virtually mean "whenever the hell you want" (being literal, you'd be hard pressed to think of a situation in which there are NO shadows whatsoever within 10 feet of the hider). You'll have to decide what that phrase means in your campaign.