Realistically speaking with another phone in front and imagining how close one has to be for it to work reliably (as it is not a 64x64 pixels image) I think it would be really hard not to notice.

The same way you whisper to say something secret in a public space I would expect people who transfer something private in public would have the presence of mind not let other snoop on and react accordingly.

They could, you're right.

Usability is important though. If you have to type in a bunch of hex digits before sending, it won't be used.