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Cloaking defined by Wikipedia
Cloaking is a black hat search engine optimization (SEO) technique in which the content presented to the search engine spider is different from that presented to the users' browser.
From Google's FAQ section for webmasters you can also find the following statement:
To preserve the accuracy and quality of our search results, Google may permanently ban from our index any sites or authors who engage in cloaking to distort their search rankings.
Webmasters have many different opinions when cloaking can be used and when it should not (you can read more cloaking threads at webmasters.com). In one particular instance I was looking at a website from a Fortune 100 company that I really liked (bcg.com), and it surprised me to find a cloaking technique in their H1 header text.
Are they really cloaking? Yes they are. A person visiting the website only sees a logo on the top left corner, while the H1 tag is what the search engines index.
How are they doing it?: The company's cloaking solution uses a simple css technique: they wrap a link around a div (named "logo") which is then wrapped around an H1 tag. Here is the html code:
<a href="http://www.bcg.com" style="cursor:hand">
<div id="logo">
<h1><span>BCG - The Boston Consulting Group</span></h1>
</div>
</a>
Then they use CSS in order to hide the text behind the logo (so that only the picture logo displays to the user:
#logo { width: 260px; height: 111px; margin: 0; padding: 0; background: url('/img/logo.gif') top left no-repeat; text-align: left; float: left; } h1 span { display: none; } Why not separately display the image logo and H1 tags? Having a visible H1 tag on every page may not look aesthetically pleasant to the end user and some companies would prefer to show just a well recognized logo to their uses. Cloaking H1 tags under an image logo provides a way to show the logo to the user while still have each page's H1 tag include their brand name. 
Are they alone? No. Many other Fortune 100 companies (like Qualcomm, Quicken Loans, Ohio Health, Gore Tex, SAS) are also using this particular technique. I don't believe Google will ban any website from cloaking their H1 tags with their image logo as long as it is clear that they just want to provide a better user experience and not distort search rankings. In most cases all the companies that I've searched and found are just cloaking H1 tags with images for their brand name.
Recomendations on Cloaking Images: Because the sites in question are not already banned from Google's search index, it's probably the case that cloaking H1 tags with your brand image logo should be ok and won't get your site banned. In this case, it should be clear to Google engineers that you are not trying to change the message you give to people vs search engines, but want to provide a better user experience. They keyword here is "should", so keep in mind that any form of cloaking in the long run is probably not going to be worth the effort - only the search engines know what is acceptable when it comes to what is considered "cloaking" and what is not - so it can become difficult to guess. Also keep in mind that it's usually not too difficult for a site to rank well for their brand name because normally there isn't going to be a large number of competitors with the same company brand name out there. Keeping a brand text in visible H1 tags, in the site's title tags and or in backlink anchor text might be a better option instead of cloaking on any level.
Cloaking
As long as it's not malicious, this is not cloaking. It's a common technique used by front end developers, which started out as "Fahrner Image Replacement" (http://stopdesign.com/archive/2003/03/07/replace-text.html) Good front end developers are great search engine optimizers without giving SEO a single thought, because of their use of such basic best practice techniques.
Cloaking
How come this will come under cloaking. This is a common practice using by all developers and designers.
Cloaking or not, I think what
Cloaking or not, I think what It really boils down to is whether or not there is a malicious intent in doing so. As per me, this is a technique that people have been doing for quite a while now so I would just leave it alone.
two H1 tag?
By having a H1 in our logo, and then a second H1 on our page above the text, is there a conflict in interest. I thought we should only use one H1 per page? can we use two h1 tags if one is cloaked?
Cloaking and 2 H1 tags
I would agree with Fion in that the malicious intent or the overuse of techniques like this is what it boils down to. I would recommend not using ANY cloaking techniques given Google will likely pick up on it eventually. However, there are CSS uses of concealing code that still work. A good example is yelp.com where they have the expanding DIV tag but keep in mind there is a link to the code, so technically they aren't hiding it.
I would recommend only one H1 tag and the rest are H2 or H3 tags, but cloaking is not generally recommend in any context if you want to be truly white hat.
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