Didn't think of that one. Hmm...
Oh, yes. It's been discussed at SMF that the 'hide online' doesn't hide last online time for users, this is an extension of the same idea.
Well, I suppose we could just hide it entirely, too. It's a bit annoying because sometimes you'll (at least) want to know whether someone is an active member or not, but...
Oh, maybe we could hide the item *only* if the user has been online in the last X months...? i.e. if you're no longer a regular visitor, what do you care that people know you aren't...?
Admins have access to the database anyway, so showing this is okay. (I added em tags around the action because AFAIK there's no other way in a profile page to see that a user wants their privacy enabled.)
There is still an issue, though, regardless of whether hide online is enabled or not - it's still logged as to what they're doing and it's still shown to admins, so even if 'hide online' is on, it's not hidden from admins. Whether that's a privacy issue is also questionable, of course.
(AFAIK we have only one regular lurker who's hiding his online status here, and it was helpful for my tests earlier today :P)
Now, as to whether or not we should STORE their online status in the database... I think it's asking a bit much not to do it, right..?