I saw an MSDN Forum post today, so I looked for a ListInstance Hidden property in SharePoint 2007 features. There is none, but interestingly enough there is one in 2010. I wondered what would happen if you did this:
<Elements xmlns="http://schemas.microsoft.com/sharepoint/">
<ListInstance
FeatureId="00bfea71-de22-43b2-a848-c05709900100"
Title="Hidden List Test"
Description="Testing a hidden list."
TemplateType="100"
Hidden="TRUE"
OnQuickLaunch="FALSE"
Url="Lists/TestHidden" />
</Elements>
It hides the entire list from SharePoint Designer and the browser, however you can hit the list by typing in the url in internet explorer. Pretty cool stuff. Enjoy guys.