Heck with it... I'm just giving this it's own thread. Tired of having to repost it in every moronic "nerf afk cloak" thread that pops up seven times a freakin' hour.
Even though cloaking isn't broken and is working as intended, I once again offer this change to the system for consideration:
1. When a vessel cloaks, it gets removed from local. You cannot see the cloaked vessel (or pilot) anymore, after all, they're cloaked.
*** Note: The following changes to immediately disappearing from local were suggested by Onyx47. These seem highly reasonable and worth adding to the discussion:
a) Cloaker remains in local for a short period of time after cloaking. This enables you to see him in local even if he spams cloak as soon as he moves. 20 secs sounds reasonable since that's the session timer duration, combined with gate cloak which should not remove you from local and considering loading the system takes some time that would amount to a minimum of 25ish seconds the cloaker is visible in local.
b) Local reconnection delay for the cloaker after decloaking. Meaning, if you decloak your computer needs 30 seconds to recalibrate and reconnect to local channel. This timer is equal to current recloaking delay. Gates are however not affected by this and you show up in local right away. This means just pulsing your cloak to see local chat takes, at minimum, 30 seconds for you with addition of being visible in local for a minimum of 50 seconds. Of course, you need to stay decloaked longer to actually SEE what's in local.*** End note ***
2. When a vessel cloaks, it also loses access to local. They can't see you... you can't see them. If you want to gather intel while cloaked, do it actively through use of dscan, probes, or simply going somewhere and watching. (This is a tried and tested methodology in wormholes that works just fine.)
3. When a vessel uncloaks, there's a delay in being able to fire off a cyno of approx 15 to 30 seconds (possibly 42), depending on balancing. This prevents abuse of the hot drop mechanic by allowing the aware an opportunity to act on the fact that there's a vessel uncloaking nearby.
Exception to #3 to consider: I'd consider allowing Black Ops (and possibly Recon) ships to not suffer the delay in firing a cyno. They're a special class of ship that should have this ability.
So, what do we gain from this (especially that the "nerf cloak" crowd fails to provide)?
Cloaks are allowed to act more like true cloaks. Intel gathering while cloaked becomes a more active affair. The overpowered intel tool called local remains effective for ships not cloaked. Cynos and hot drops are balanced to prevent abuse, but they should still be effective. Black Ops ships find a greater role. Null sec still retains the element of danger it deserves instead of being turned into Eve: Asteroid Adventure. Important to me: Wormholes don't take any hits due to cloaking mechanics being broken.
So there it is... what appears to be a well balanced tweak to cloaking and null space that should add a good bit to the game (instead of taking away from it). Cloaks, and covops especially, are allowed to truly function covertly in empire space adding a new twist to intel gathering.
And, most importantly, THERE WILL BE NO MORE "AFK CLOAKER" THREADS!

Addendum: Dr Karsun adds the idea of the onboard scanner being disabled while cloaked. It would add a little more penalty for cloaked vessels... worth adding to the discussion.