I have a whole thing about what 'Balance of Terror' was about and how it relates to Klingon ships being used by the Romulans in 'The Enterprise Incident'. It goes like this:
The Romulan ship in 'Balance of Terror' was a test platform, yes, but not for the cloaking device. Despite the scene where Spock talks about how selective bending of light is possible, my thoughts are that the Federation was familiar with cloaking technology, but I figure that the countermeasures they had developed for the Romulans' prior generation of cloak (which was the one encountered during the Romulan War, since they had not had contact with Romulans since then) were effective enough that they didn't even consider those old Romulan ships cloaked at all by the end of the war. For all practical purposes, they were visible on sensors and targetable no matter whether or not the cloak was engaged.
During the intervening years, however, the Romulans did develop newer cloaking technology and it was widespread throughout their fleet. In fact (in my mind) they had used it previously (but not too long ago; maybe a year prior to the episode at most) to conduct raids into Klingon space for the purposes of capturing Klingon battlecruisers. (More on this in a moment.)
Instead, in my head, the Bird of Prey was only out there to test the plasma torpedo. They wanted to see how effective it would be against Starfleet installations, and the border outposts fitted the bill quite well. (And, indeed, the weapon proved quite effective.) The way I see it, the Romulans' plan was to, if the plasma torpedo was deemed serviceable, use it in conjunction with the Klingon ships they had captured. The idea would be that the plasma torpedo-equipped Birds of Prey, cloaked, would accompany squads of captured Klingon battlecruisers and they would go to various planets and starbases in Federation space. The Klingon ships would begin an assault, and the Federation outposts would send a distress signal stating that they're under attack by Klingon vessels. Once the distress signal went out, the Bird of Prey decloaks and uses its plasma torpedoes to utterly destroy the outpost(s).
This would lead the Federation to believe that they were under unprovoked attack by the Klingon Empire. As such, the Federation would have no choice but to declare war against the Klingons, and a bitter war would ensue between the two. Meanwhile, the Romulans sit back and watch while their two biggest rivals slug it out in in a long, bloody war. After awhile, the war will have weakened both so much that the Romulans can then mount proper invasions, cleaning up and claiming victory over both the Federation and the Klingons.
And think about it, that's the kind of thing that fits the Romulans' modus operandi to a tee. It's very similar to the kind of strategy they employed in the run up to the Romulan War, as seen towards the end of Enterprise season 4. And even Garak thinks that the level of duplicity he and Sisko tried to convince the Romulans that the Dominion were guilty of is "exactly what the Romulans would have done in their place."
So where did it all go wrong? Simple: the Bird of Prey got caught in 'Balance of Terror' and the Romulans lost the element of surprise, which they needed for the entire plan to work. After that, the Romulans decided to make their captured Klingon ships part of their regular fleet, equipping them with Romulan weapons and equipment and even painting the bottoms of their hulls with the traditional bird pattern, which is why we see them as such in 'The Enterprise Incident', and why Starfleet Intelligence even reports that Romulan ships have recently started using Klingon ships. ("Intelligence reports Romulans now using Klingon design.")