Barry made a great find today on SE Roundtable, about a Google Groups discussion of hidden text caused by using CSS. Apparently, I’m not the only one who’s had this exact discussion with multiple clients in the past three weeks.
If your intent in hiding text is to deceive the search engines, we frown on that; if your intent is purely to improve the visual user experience (e.g. by replacing some text with a fancier image of that same text), you don’t need to worry.
Of course, as with many techniques, there are shades of gray between “this is clearly deceptive and wrong” and “this is perfectly acceptable”. Matt [Cutts] did say that hiding text moves you a step further towards the gray area. But if you’re running a perfectly legitimate site, you don’t need to worry about it. If, on the other hand, your site already exhibits a bunch of other semi-shady techniques, hidden text starts to look like one more item on that list.
So there you have it — a very reasonable response to a somewhat thorny question.
By the way, if you’re like me and find there’s too much noise in the Google Webmaster Help discussion group, you should bookmark the profiles of the Googlers who occasionally post there with helpful (read: official) answers: