Setting on post think, does seem like it could do the trick.
If it only works for spies, then can we give the other classes the watch or attributes needed? I presume it is not locked to the spy.
I have redone my code and the best solution now, is to have them transparent. Such that we can still see the weapons/cosmetics, but not the player model.
The reason the cloak effect would have been nice, is because of the flickering effect on contact. This would kinda need to be coupled with some particle trail or beacon too, to keep the game play interesting still.
edit:
I had a look at some examples of invisibility and ended up with a rather neat (and working) effect.
PHP Code:
SetEntityRenderMode(i, RENDER_TRANSCOLOR);
SetEntityRenderColor(i, 255, 255, 255, 15);
This only effects the player model (and things like the vanilla medic's backpack). Colour doesn't appear to change. Large cosmetics, such as the Halloween souls, do show up in full though. It also resets to normal on spawn or deathcam.
I am glad to finally have this working. Thanks everyone for your help.