I think it'd be interesting as part of a skin pack to use the skins that several spirit NPCs have, like the ayleid spirits from say, carzog's demise, and dro-m'athra from reaper's march. Basically like this:

• Ayleid Spirit (Transparent with yellow/gold coloring)
• Passive Spirit (Transparent with blue coloring)
• Aggressive Spirit (Transparent with purple coloring)
• Dro-M'athra (Transparent with black coloring)

These would just apply the transparency and color override to the player, and not overwrite the character's armor. Also, depending on transparency levels these could be disabled in Cyrodiil and Imperial City. The proof of concept for this idea is already present in the kollopi essence disguise you can collect in Greenshade.