I think the concept of player privacy is an interesting game design aspect to discuss. I've been many games handling these issues in different ways.
In the first game I ever helped staff was built on digichat, in it was common practise for the Storytellers to wander around the public rooms invisible, watching the scenes going on and sometimes when appropriate they'd start running a scene on the spot. If you wanted real privacy you had to create a password protected private room. This actually worked out surprisingly well for the most part.
On RfK, we had a policy that we would never be dark on the grid, as I understand it due to various horror stories from MU* past. However what we did have was a debug channel which outputted information when most coded systems were used like rolling dice or feeding, the most interesting part was when after many requests a simple 'txt' code was added. It was really just an alias for page and like most of our other systems, it was set up to output into the debug channel.
This turned out to be really interesting and valuable for us in staff since we got a live feed of the things that characters were talking about ICly at any given moment, giving us a much better idea of the current state of the game.
The biggest problem I tend to discover in the transition from being a player in a game and staff in a game is that as your awareness of behind the scenes things increase, like player requests, metaplot etc etc you often lose awareness of what's going on at the player level since you don't get to interact with people in scenes the way that you used to. Spying on players is one way to gain that sort of awareness but it's something that is easily abused and can lead to the loss of player trust.
What are your experiences and thoughts on player spying?