I guess my questions is why someone would want to hide it. And as someone mentioned in another thread, if enough people did this, it could "appear" to be a deserted site or not so busy forum?
I've set online status to only be visible to those who are registered members i.e. guests can't see who is online (either status or the online new/recently online blocks). We're a small community and we all know each other quite well, so I can't see a need to hide online status. However, we do have at least one member who does.
Rather than remove their right to hide themselves from others, I took a different approach. If someone wants to hide their online status so that others can't see them then that's fine, I've used conditionals so that hidden users also can't see who else is online. If you want to be hidden then that's fine, but if others can't see you then you can't see them.
Waindigo has now released an add-on to do this though I just did mine by editing the various templates. The tricky bit was remembering all of the places that online status and related bits appears in.