That is, someone with -3 (or whatever the threshold is) or less is still hidden, but if they have -1 karma it just displays "no points" or something?

That does seem like it would be somewhat useful- I tend to vote up or down almost regardless of karma (the only effect I've noticed is a slight increase in the chance I vote up if the karma is negative and I like it) but I know some other people do it to hit some karma target they have in mind.