I believe it depends on the context. Presenting a correct model with which students could naturally learn the grammar is a sound principle and a significant improvement over the traditional grammar translation method of teaching languages, but I think it would require a lot of effective and correct input. In this case, it may not be an ideal idea to use covert grammar teaching method in certain countries such as China where an English teacher's prime goal is to equip dozens of students with a vast repertoire of grammatical knowledge under an examination-oriented context. It also depends on what kind of English it is. I mean it may be proper to use covert method when teaching English as a native language, while with regard to EAL or EFL, it may be a different story.
In fact, both methods are needed and useful in teaching grammar, or at least some features of grammar. Personally, I prefer the covert one because it gives long term results and tends to establish more acquisition rather than learning.
An approach that I have seen work well in the past was based on two teachers. Teacher 1 taught English grammar rules to the students (children aged 11) in their mother tongue, illustrating these with English examples. Teacher 1 had only one or two hours of teaching per week. Teacher 2 was a native-speaker of English (though I don't see any reason why s/he couldn't have been a proficient non-native speaker) and taught about eight hours per week. Teacher 2 engaged the the students in activities through which they had to use the structures covered by Teacher 1. Only English was used in Teacher 2's classes. The students made remarkable progress over an academic year and almost all of them could use English quite naturally and accurately by then, having started as false beginners.
Both overt and covert ways of grammar teaching shouod be employed. In fact, a mix of both world well because each learner has different learning sbilities. Also, some concepts need more examples amd explanations.
Most importantly, learners must get hands-on practice to crystallize those concepts amd their usage.