In general the people being lead do realize they have a good leader/manager after some time, even if they tend to underestimate the effort needed to provide that level of leadership.
I was that guy that had a great manager in the beginning of my career for 2 years. At the time I was thinking he's a good guy but not great. Only later (+5 years) did I realize what a great manager he was and what an impact he actually had on my career.
But you're right, the biggest risk I've seen for this kind of leader is how upper management perceives you.
Not a huge risk though, as in most companies upper management ranks leaders/managers like this:
1. people obey and acclaim him -> best leader
2. people barely know that he exists, but good things just seem to happen in his teams -> ok leader. "He's lucky to have a great team" - Average Joe CEO
3. people despise him -> bad leader
Instead, if your company ranks 2-1-3 then you're lucky to be working for a great company, but if your company ranks 1-3-2 then run for the hills.
From what I've seen number 2 gives the best results overall with very positive long-term effects on the team, but it takes another good manager to recognize and appreciate that. So you might end up frustrated if you're expecting recognition and accolades from someone like Average Joe CEO that I quoted above.
In the wild I think a continuous balancing act between 1 & 2 works best. You're probably a saint if you can pull number 2 all the time while also keeping your sanity. :)