I wasn't feeling any of the options, so voted just give me the bacon.
The stealth rules are what they are. Could they have been better? I'm sure. Are they serviceable? I think so. Are they too hard to benefit from? Depends on the game. Should they be hard to benefit from? I think so. There are plenty of ways to gain CA. I don't really want Stealth to be an every day combat skill. The occasional hide and seek could be fun, but if used in every combat, I'd start to get irritated. So your goliath wants to hide behind the halfling eh? Well the dire ape hiding behind the spit bucket jumps out and tears your limbs apart.
The rules for the most part do a good job of closing loopholes so there is no trivial way to hide in plain sight. And just like PC's can make each other aware of hidden enemies, so can the bad guys. And if stealth was any easier to use in combat, in most my games, I'm positive it would work against the PC's.
Having said that, I can see the less rules savvy players looking at stealth and getting utterly confused. So, there probably is room for improvement as far as the wording/examples go.