Had to be invisible. If he were visible but in disguise, no way would SHIELD 1) allow him to get that far inside the base without raising a hell of a fuss, or 2) allow him to try and lift Mjolnir without a single word or glance in his general direction. I think the suit was just 'cause Loki's a fashionable son of a gun.![]()
I've been going back and forth on this. I guess it depends on what kind of magic we're supposed to think Loki is using.
Invisibility is, I think, the simplest explanation. And honestly, I think it's the one that the GA is most likely to assume was the case. Therefore, if they had wanted the entire audience to get that he was doing something different, they would have had to explain it a bit more. They didn't, so... I think they were fine with the GA assuming he was just invisible. And I think you are right here, that the "trying to lift Mjolnir" bit is the best example of where everything is framed as if he's invisible.
A more complex explanation might be that he put a glamour on everyone, which I think seems reasonable as part of Loki's box of tricks.
To be clear, I don't think he was just in disguise; meaning, he just put on an Earth suit and bluffed his way in. Wearing the Earth clothes would have HAD to be accompanied by some magic to make the people he was meeting perceive him as someone who was "supposed to be there", and to perceive whatever he did as something he had a right to do. It would be similar to the Doctor's use of the psychic paper in the new series of Doctor Who -- it's not a complicated trick to make people think you are someone who ought to be there.
However, I think if that had been the intent, the movie would have needed to show us some little interaction between Loki and the SHIELD guys, to show them treating him as "someone who should be here". If that's a deleted bit that we get on the DVD later, fine; but it's not in the movie right now.
Another magical possibility would be... a glamour that just acts as, in effect, "just a hedge, citizen; move along". It wouldn't be Loki specifically tricking everyone into thinking he is someone he's not (a gov't VIP for example). It would just be making it so that everyone would perceive him as... not worth noticing. I'm trying and failing to come up with an example of this being done elsewhere, but I know I've encountered it. The only reason I consider it a possibility is that it would explain the suit, aside from Loki's vanity.

... I'll tell you something that bugged me about that sequence -- and I apologize if this has been brought up and discussed elsewhere already, I'm still in the process of digging through everything here.
So, SHIELD has Thor as a prisoner. They're interested in who this guy is. Coulson is going to interrogate him. Why would they not be recording him in that room? Audio and visual, that is. Why not have a camera on him during the interrogation, so that SHIELD superiors, who are elsewhere, can also view it later?
This only bugged me because the first time I saw the scene, I thought that Loki's appearance, and thus the extended sequence of Thor "talking to nothing", was going to factor into SHIELD's assessment of him. "We left him alone in the room and he had a whole conversation with thin air". And thus, I thought that was part of Loki's plan -- to appear to his brother, but invisibly, so as to make Thor look crazy. (And I hadn't even read the Ultimates series at that point!) I figured it was going someplace, and then it seemed not to, as it wasn't brought up by anyone. Yet, I couldn't figure out why they wouldn't be recording the interrogation.