Actually, I have the perfect solution for this, one that everyone (no matter your views on realism) will be happy with.
For those that play AD&D, thieves and rangers have a similar ability called "hide in shadows". You need to be in shadows to hide. Of course, there are also magic items to help you create shadows. When you hide in broad daylight, eg hiding behind a stack of crates/tree/rock, the GM may want you to roll your "hide in shadow" percentile or dex (for non thief/ranger chars).
So hiding in shadows in the case above is a misnomer (it's broad daylight! and all you have is a rock to hide under?), just like in UO. If you will allow me, my solution is thus:
1) Remove the "Hiding" skill completely
2) Create a new skill called "Camouflage". Description :
Camouflage
This represents the ability for the player to blend into the backgound using things like plants or soot (or even cloth painted black on one side and green on the other) to disguise your presense. No items are actually required - it is assumed that the players with the skill has picked up the neccessary items according to their skill level in camouflage. Players with low camouflage skills means that they lack the knowledge or sufficient items to effectively camouflage themselves. Masters of camouflage would be the ones that have spent time to accumulate items that they can use to camouflage themselves in any situation. Even if not, they would have the knowledge/skill to jury-rig effective disguises as a tree/rock/grassy mound in an instant.
Using Camouflage
To use the Camouflage skill to blend into the background and effectively become invisible to others:
Click the blue gem next to the skill on your skill list.
If successful, you become invisible to other players and monsters.
Camouflaged doesn't mean undetectable! You may be revealed by others using the Detecting Hidden skill, or by casting the Reveal spell, and you may be tracked using the Tracking skill. You may also reveal yourself through your actions, such as moving, speaking, casting spells, looting bodies or attacking monsters or others. You may loot your own body and remain camouflaged.
Camouflaged doesn't necessarily mean safe. In addition to being revealed by others, while camouflaged you may also take damage from area-effect spells or purple potions.
It is even less safe in Felucca. Other players that step on your camouflaged avatar, will get a message indicating that they pushed through something invisible (or stepped on some strangely soft rock, but we'll limit the message to the one above).
Hint: Camouflaging yourself requires your full concentration, so it may be impossible to camouflage yourself while being attacked. It can be more effective to run away from your target, exit War mode, and then attempt to camouflage yourself.
As your skill in camouflage increases, you also increase the minimal distance you need to put between you and your adversary before making your camouflage attempt.
Thieves have a chance to snoop and remain camouflaged. This is based on a check against their Camouflage skill. At zero camouflage skill, a player is revealed when failing Snooping 100% of the time. At 100 camouflage, a player is revealed 50% of the time when failing Snooping.
The camouflage skill is very useful to Ninjas. As they can use a special item called Smoke bombs to cause a thick column of smoke to appear and distract their adversaries when they camouflage themselves.
Legend has it that a reknowned mage that has lost his magic used "flash powder" (a component of smoke bombs) to distract his adversaries while he jumped into a hollow tree to camouflage himself and trick his adversaries. A master of camouflage needs to be constantly aware and observant of his surroundings and how to camouflage himself at a moment's notice.
3) If players find that the concept of camouflaging do not fit a fantasy world (or that the name is too long), we can always rename it to something shorter, say "Hiding".
Actually, some people suspect that what I described above may already have happened...
*Wears tin-foil hat* I think they are reading my mind...I found a description oddly similar to mine here:
http://guide.uo.com/skill_21.html