That was when he was done hiding. I think it would be better, IMO, if they kept that reveal in the cantina be when he finally steps back into the Jedi role in ANH. It kind of cheapens that if he's been doing that for the last 20 years.
While reading about this on another site, a new loophole popped into my head on lightsaber use. If they showed him, discreetly using his lightsaber, then camouflaging the wound, that could work. They could show him doing something like modifying a blaster's output to scorch the wound and disguise the lightsaber damage. Also in the old EU Corran Horn put a fake piece onto his lightsaber to make it look like a hydrospanner. He could knock it off to use his lightsaber. That kind of stuff might make lightsaber use more palatable IMO. I'm sure every good Imperial believes the Jedi did try to overthrow the Republic, so most people would jump to turn one in and get a reward.