@Lew Yard,
w.r.t AI, I see the following scenarios:
1. The player see's partial contact. No AI required.
2. I don't know if civi's react to hostiles or friendlies but presumably they just run away from anything that is unknown. (or do they..)
3. Aliens see partial contacts. They are obviously seeing partial contacts of their own guys, so the partials are civilians/soldiers. In either case, they are treated as hostile.
-Now this third case is the only scenario where some AI is required. Generally, I think a partial contact should be treated in the same regards as a human soldier. This is the easiest to code and it makes logical sense. (And if you wanted something more complicated: I'm not too sure how the AI system currently works, but presumably there are some "macro" level settings (aggression?) and some if/case statements. Presumably the conditions use against partials should be somewhere between vs human soldiers, and civilians)
w.r.t How long to leave a contact partially visible for
If you can see them then their partially visible, until they are become more/fully visible, or they become invisible.
The idea is not to provide a "ghost" of where they where, but to provide information of where "something" is right now. There is no concept of merging, as you can not have 2 objects on the same tile. For simplicity the position should be 100% accurate, the idea is you can see "it", you just don't know what "it" is.
As to how you would actually display it. Perhaps either something iconic (e.g. yellow cylinder with a question mark??), or something ambiguous (black/camo humanoid with a question mark?)
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Another reason for inclusion is that it provides a positive and a negative effect for using goggles. (+ partial sight distance, - fully visible distance if any)