Yeah, I was just wondering about the ethical implications of all this.
Using this method, the tags would still be on your page (allowing you to reap the SEO benefits), not taking up all the room (giving you space benefits), and it would still be possible for users to view them (minimizing the appearance of "sketchiness").
As for the exact code, there are a few themes that do this internally (Ahimsa comes to mind, and I'm sure there are others), so you might be able to figure out the code there. Also, if you don't want to hard-code it, there is a plugin that might work for this purpose: Collapsing Objects.
Note: I have not tested this plugin, so I am not guaranteeing its results.
All of that information should help make your tags more ethical :-)
P.S. @jonathanstegall: Are you sure that invisible tags are frowned upon like that? What about the META keyword tags of yore? Weren't they invisible also? Or is that the reason Search Engines are moving away from them? Not saying that you're wrong (actually, I kind of agree about the whole "invisible object" thing. It certainly might appear sketchy), but I would like to see your source on this. Thanks.