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Ok, Stealth creates blocking terrain only for LOF purposes, such as a ranged attack. A close combat action does not require LOF, so Stealth does not protect from it. This also includes powers like Outwit, Perplex, and PC (all require LOF to the target, even if they are ajacent to the target).
The Superman Ally team ignores hindering terrain for movement and combat actions, so the Stealth character simply no longer has anything to hide in.
Also, Stealth is an optional power, so you can 'shut it off' during your turn, and it comes back on at the end of your turn. This allows you to Perplex or PC your Stealth figure, and he will be hiding again on your opponents turn. This will however leave him open for your opponents PC, but thats about it.