I loved this episode, because it reminds me so much of "The Philadelphia Experiment," which I believe really happened. I agree with Riker, when he said that if he had known then what was really going on, he would have joined the mutineers! Picard was right in informing the Romulans of this treaty violation. (Of course, it made sense to wait until after they'd used it to free themselves!) Two interesting asides about the Philadelphia/Pegasus experiment: 1. Some say it was connected with the Montauk Project, which may have been connected with Mars; and, 2. A writer I just read suggested that the Kecksburg (PA) "acorn" may have been part of a WWII German time-travel experiment. Both of these allegedly real-life events are like the Pegasus episode.
TNG seemed to make clear that one of the clauses in "The Treaty of Algeron" was the ban on the UFP from developing clocking technology. It doesn't matter if this clocking was a secondary, tertiary etc.. effect. If the device caused the ship to become invisible to the naked eye then it was a clocking device. Now if the Federtion device in "The Pegasus" simply caused the ship to phase then it wouldn't be a violation of the treaty. As one of the effects caused it to become invisible to the naked eye then it's illegal under the terms of the treaty. But to expand it further would a phased ship even show up on sensors? It might not, ddue to it being out of phase surely sensor scans would just pass straight through, same for phaser/disrupter beams, torpedeos, interstellar matter etc.. So in effect you would have an invisible ship to everything but the naked eye.