I suspect that some players have a rough idea of NPC bonuses anyway. Kobolds +4, Ogres +6, Giants +8 or more. With bounded accuracy, it's not that hard to figure it out, especially in round 2 or later.
The purpose of the ability is to give a bonus when needed. Doing it when the PC is "hit" means that it will fail maybe 60% of the time (i.e. the successful to hit roll was too high to be affected). So, doing it on the observed (or stated by DM) roll lowers that failure chance to maybe 25%.
We have a Bard in our group and it has just worked as advertised. We have not noticed an issue.