Beautiful solution
Quite.
Although, I can see that there is a legitmate question about "how pungent", say, the Gift is if you have magic sense that allows you to smell it.
Is it as pungent as ammonia? In which case you should be able to smell a Gifted individual within dozens of paces (or a Tribunal meeting from more than a mile away, given good wind direction, etc). Or is it as pungent as a rose, in which case you probably need to be with a couple of paces of the Gifted individual to smell him.
Which is all basically questions that are answered by the particular spell design. As storyguide I would be generous. Certainly, you should be able to smell a Gifted individual if you are within the same room as them. Outside, it will be a matter of environmental factors like wind direction, temperature, humidity, other smells about, and how developed your individual sense of smell is. Which is all too complicated to have game rules about --- it is just something for the troupe to decide based on context, and what the players feel is reasonable given that they each have noses.
-3 to interactions... pretty pungent I'd say 
The mind boggles to encompass all that is unclear.
Child One: I shot you, you're dead!
Child Two: Nuh, uh! I shot you first, you're dead!
GM: You hear the hunting dogs and their masters coming down the river, hot on your trail.
Player: But I smeared mud over myself from head to toe, swam five miles down the river, smeared mud over myself again, and then hid in deep bushes. They can't find me.
GM: Hunting dogs aren't fooled by anything like that.
Player: Yes they are.
GM: Nope.
Facts as I Personally Know Them: The only thing that will stop a dog from smelling something is the scent of another dog in heat (or being in heat). Masking odors and sealing things up are completely useless.
RPG rules exist to agreeably adjudicate such obvious disagreements because everyone, including the GM, follows the same rules, and therefore arbitrary acts by the GM are not solely in control of the situation (we might as well be playing Amber RPG at that point). If the GM is making up the rules as he goes, we revert to the two-child shoot 'em up scenario, where the second party is going to vehemently disagree with the first party's decision.
One person's everyday is another person's couldn't happen.
It's not a matter of the GM making up the rules. It's a matter of the troupe agreeing on what is reasonable given the immediate in-game context. And at some point, the troupe needs to trust the storyguide to adjudicate in a reasonable manner.
It's impossible for the authors of the game to write rules that satisfactorily anticipate all the relevant details of your in-game context. Especially for everyday things, where the players will have legitimate ideas about what is relevant that might be at odds with what the authors have assumed.
Exactly. And rules about everyday experiences are only ever going to reflect the author's everyday experience. So, you will probably won't like the rules, and need to house rule around them anyway.
Don't play with children.
Ah, good ole GM as the Enemy!
Whose story is it, then? Are the players mere pawns under the cat's paws?