This is a major treasure. This cloak appears to be your average everyday mundane cloak when worn normally. Upon turning the cloak around and part of the users body that is covered becomes completely invisible. As such hunching down and covering their head will render the wearer completely invisible and still capable over movement. As with all invisibility spells and techniques the user can still be heard, felt, and smelt while wearing this cloak and can easily be seen by anyone with a lense of truth.
This seems like something that would be a dealbreaker in site balance but we do have, as you mentioned, the Lens of Truth. In ALttP, Link can go invisible with the Magic Cape. There's no use for being invisible in that game but Link can't take damage when he wears it, the game balances this by not letting him do much else but walk while he wears it. I suggest something like what DnD does with minor invisibility, where the wearer of this loses their invisibility if they make an attack. It probably seems restrictive but imagine attacking a powerful figure in the dark, you'll still land your initial hit but there will be consequences when you re-appear. Someone without this restriction could run around freely, killing kings so long as they aren't heard or smelled. At least until some Sheikah catch them. We can't expect the people in danger from this to all have Lens of Truth, however. So long as there is some sort of downside I give this concept my approval.
I didn't even think about being able to attack while using it. I suggested it strictly as a stealth treasure so I am 100% ok with adding that the cloak must be returned to normal before being able to attack.
