I just hope that no matter what that we will be able to equip the best stat armor/clothing "underneath" and equip the best visually appealing clothing/armor "over" on top. I want my V to look really good, but a lot of video games usually make the best stat items look horrible, so I am very scared about this.
If I can equip the best stat items, but hidden, and then choose which items I want V to LOOK like they are wearing, that would be so cool, because then I wouldn't have to suffer between choosing to look bad with good stats, or having terrible stats and looking good.
I understand this, but I'm personally against it to some level. In other words, I favor a more realistic approach, let me give a simple example: I like style and my corpo suit. But a better or "best" armor would be a huge armor suit full of ballistic plates, making you look almost like that Arasaka super cyborg guy we've seen recently in the trailer.
Obviously, with my little suit and fabric (even if it has special abilities) I can never reach the best protection value. It's simply a style over substance (or practicality?) choice. Likewise if I want big protection but style I shouldn't be overly confused if people (at a social event, e.g.) comment at me looking out of place or like a tank. No clue how deep the NPC response system (in general or specific situations) will be in terms of clothing or gear equipped but I assume it will occasionally be a thing, if NPCs already comment on you staring at them or being to close to them, I would assess they would comment your clothing when it makes sense.
But this game, due to its setting, offers a compromise you might like or seem fitting. I assume that the augmentations and upgrades you can install into your body like more hardened skin or subdermal armor would allow you a compromise to retain good protection while wearing your ... favorite clothing that might not have the best stats on its own.
TL;DR: I get the convenience factor but I personally prefer it more realistic or, rather, without a "hidden item slot" or item slots for clothing that are displayed over your actual gear, masking them. But we'll see what we get come release day. I guess a system you propose wouldn't even hurt because those who want it more "realistic" can chose simply not to use those slots.
In reality other people see your appearance and form an opinion on it, in reality you can feel what you're wearing, if it's hot or cold, comfortable or not, the texture and details, etc...In reality you can see your body from the chest down rather than just hands or in the case of fancy athletic maneuvers: legs. In Morrowind there was a very rudimentary system of NPCs commenting on what kind of clothing or armor your character had equipped, in some games certain outfits let you pass for a certain group or faction which can make NPCs friendly or hostile. If there are systems like that in the game then having different outfits makes sense. If not, there's no point. You don't see the character 99% of the time or more so you can imagine they're wearing whatever you like.
Despite other arguments I wanted to bring, there is a simple one that kind of forces different visual representations of clothing: In the end you will see your character and what he is wearing at specific places or under certain conditions, so they need to add in a visual representation unlike in a game where you do not see your character at all, 100% of the time.
What is the alternative to it? Completely cutting any moment where you see yourself like in a mirror? Or having each wearable look the same like a grey jumpsuit? That can't be an alternative.
In other words, just because you might not see your character as often as you could by implementing other mechanics like a third person camera doesn't necessarily mean the visual representation (mesh, texture) of clothing becomes useless. I am also fairly certain that your clothing of choice matters in a social context on occasion, with people possibly commenting on it or reacting. If I go to a high socialite corpo event dressed as bum or Nomad I'm expecting some remarks, just as I would expect to theoretically be immediately provoked or also shot at if I was wearing wrong gang clothing in the wrong turf, or enter the combat zone looking like a cop, if we can put those uniforms on.
Certain clothing might indeed cover things you mentioned in your post, like let you pass as someone. Hard to say, I don't recall (still valid) dev quotes on this, nor do I know every street story or quest of the game where this could be a thing, nor do I know how big the range of clothing is.
Will it be a wider set of general clothing like jackets or suits and shirts? Will the look always be 'civilian' in nature while other things people or factions wear are off-limits to the protagonist? Or will the clothing we can equip also include classic armor suits or vests, maybe even uniforms and faction wearables? If so, would wearing those things provoke anything from the same faction or opposing factions?
Questions, questions. Only time will truly tell, once we can play and see it for ourselves.