[Kovner]

I only skimmed the 2nd half of this thread, but I have something to add.

First, though:
I strongly agree that high demonination chips should be visible, but I don't know how to handle the situation where someone makes a call or push misreading the size of his opponent's stack. Should someone who doesn't know the rules be punished when they innocently have a high-demonination chip somewhere besides the top of a stack? Then again, shouldn't everything be done against the favor of angle shooters?

As players, though, debate of what rules exist and why is less important than understanding what we should do individually. When I'm at the table, I make every effort to make the size of my stack as clear as possible. Sometimes, I even become worried that one of my stacks (say my green stack) is only visible to half the table and try to rearange to make it clear.

Here's my main contribution to this thread:
What should a player do when he sees another player hiding (deliberately or not) a high-demonination chip?
MM and DS have continually explained the dangers of coming off as a rules-nit at the table: it decreases the friendliness of the game, and makes the game seem less honest (a problem if you desire to keep that specific game running long term). So what should you do?
I think a player, in this situation, should somehow tell the dealer, in the vaguest possible terms, to make sure everyone has their high-demonination chips visible. Dealers should be doing this anyway, but they have a lot to keep track of as it is. "Hey, can you make sure everyone has their high demonination chips visible" should do the trick and alert to the dealer someone is hiding something. If the dealer can't find the person or looks clueless, you may be able to whisper (if you're in the 1 or 10 seat) which seat is the culprit, or while the guy isn't looking just nod towards him or give a strong stare. If that doesn't work, get up as if you are just going to the restroom or stretching your legs and let the floorperson know.