Other players can't see you unless you engage them in combat, even if you do once dots expire combat is disengaged and they can't again. Very easy to torment opposing faction players with this, with a hunter for example you could send an endless stream of pets to annoy people without them ever being able to find its master. Also useful for camping things without others seeing you there.
Is usable in combat, raids, dungeons, battlegrounds etc. I'm sure has many useful applications.
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To a party member you appear as a nameplate only
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In combat, you're targettable briefly. When dots expire you drop out of combat and are again untargetable.
There's no real point in showing a screen of my character when out of combat and not in a group with someone, there's absolutely nothing to see. No nameplate, no gear, nothing.
How to do:
1) Have a friend with the shard of Archstone. A drop from the rare Havak in Kun-Lai.
2) Have Ai-Li's Skymirror, a drop from the rare in Dread Wastes. (Potion of illusion may also work)
3) Group up with your friend and have them use shard of archstone. Make sure they've unequipped weapons and off-hands before using the transformation or you'll copy their appearance.
4) Target them through raidframes, use the mirror and you'll turn invisible and untargetable.
Have fun.