Hiding in plain sight only allows you to use Stealth while being observed. It doesn't negate any penalties to Stealth. If it did, then the ability would say so. If the penalty you're referring to is from sniping, you would Stealth, make your ranged attack, then Stealth again. With Hide in Plain Sight, the only difference it is making is not actually needing cover to hide behind. The penalty still applies, and the only way to get rid of the penalty is rogue talents.