"She walked into my lab like a cross between Aphrodite and Trianoma's sexier sister. Her gaze was a spontaneous CrIg 5 effect, and she moved like she had a ReCo score and wasn't afraid to use it.
I knew she was trouble, but not how much. If I'd only made an Order of Hermes Lore roll to remember who Trianoma's sister was, I might have saved myself a world of hurt."
This is the key part and could be different in every saga. All of us, I am sure have been forced to interact with people we don't like. What do you do? Generally be polite and courteous. While one may be a bit wary and more ready to find fault, there generally has to be fault before one responds.
If magi consistently step up, what chance does the penalty have to kick in?
"We were done for. There was a squad of archers about to fire, and then the whole hill just collapsed. The screaming, the rubble, I feel a bit sorry for the archers; but I'm not sorry I don't have arrows in me. That magi saved my life. Maybe he's not that bad."
"My wife was having problems. That arrogant prick marched in on the midwives. I went to hold him back, but with a gesture I was pushed away and held down. Less than a minute later he passed by, said "You're welcome" and walked off. While he is still an arrogant prick, my wife and child are alive because of him. I will not doubt him or stand in his way again."
Covenants are generally prosperous. In times of trouble magic can be used to resolve issues. Better healing rolls, extensive resource acquisition, fast message delivery asking for help, etc. Also, the magic aura means the area is just better. Prettier, food grows better, animals are healthier, etc.
Anyone in a covenant comparing their lifestyle to people in a middle ages large city, the covenant is just better. The city has poor waste and rat control, the associated diseases, poor life expectancy, etc.
At the end of the day, the Gift Penalty is magic, so one can apply it extensively. If a SG wants to downplay the Gift, at least in the covenant, there is an argument. When interacting with strangers, such as a random innkeeper, town guard etc, yes, the penalty should kick in hard.
Fae, it's about the story. Which stories have the people dealing with underlings? Not many. If the story suggests the fae interact with the magi, they should be unaffected by the Gift. if the story wants the fae to be annoyed by the magi, gift penalty kicks in.
Good points, I just wanted to comment the above is not universal.
I have one aura, under the infuence of a Herbam spirit,where plants grow - but wild and weird plants, not cultivated ones. Crops drop, as weeds and strange growth suffocate them. People develop weird fungal infections, granting a negative Recovery and Living Conditions modifier.
I don't think that kind of thing needs to be rare, too - the Forest Spirit is about growing the forest, not growing wheat.
This doesn't distract from your main point, I just wanted to point it out.
I don't think necessarily is a "one playtype fits all" situation. I'd say the approach will matter on the group's approach to troupe-style or if they want to just play their magi all the time.
In my current campaign (5 years, 187 sessions and counting), my players much preferred to develop and run their magi social interactions directly and put a lot of effort and experience points into social skills. The campaign is highly complex with a lot of intrigue, and the social skills have become paramount across Mundane, Church, the Order, several Faerie courts and the occasional Infernal agent.
"It's so hard to find good help these days..."
We've run it hard on the Gift penalty of -3 since surprisingly enough, 3 players started with Gentle Gift, but one of them has since lost/sacrificed it in a gnarly initiation. But allowed for magic to weigh up (so +3 for your choice of improvement spell, such as Aura of Rightful Authority etc - but not more unless direct manipulation through Mentem is involved), which is used in most circumstances where non-magi are on the other side. Most magi of the Order will not approve of the use of prettifying magic or aura-altering to try to sway them, it's seen as vulgar and likely adds a penalty of -3 instead of a bonus if noticed.
Magi, and most powerful supernatural beings don't care about Gift modifier either, so the playing field is usually level there. Especially the faeries are drawn to the Gift, as the individuals possessing it show far more potential for vitality and driving their stories. This effect we see as lessened with Gentle Gift (and would be worsened with Blatant Gift, but such a character would suffer a lot in this campaign).
For mundanes, Gift always gives the -3, but we've decided to play with manageble level of heebie-jeebies which is more cosmetic than anything else. The mundanes usually dealt with are also getting used to the magi (never lose the -3, but cosmetic effects go down). Also the higher and more powerful the mundane sees themselves vs the magi - the more arrogant they can afford to be about the feeling, so bishops and dukes tend to not care too much as the magi is less significant to them anyway. While lowly and powerless peasants will be far more concerned about the heebie-jeebies.
All good, and I firmly agree. One of the strengths (some may call it a weakness, but I think strength) of Ars Majica is it chooses to be deliberately vague. The rules paints a very broad picture, and puts it on the SG and troupe to pick the fine details.
A magic aura is better, but what is better? A rose is generally seen as beautiful, but in a wheat field, it is a weed. I like that the Herbam Spirit is all about making the plants better, and cares naught for the humans.
International Mushroom day is October 15, so if you want to draw inspiration from 'The Last of Us" and have mushroom zombies, that's the day to do it.
I find it useful to consider the difference between not liking someone and not trusting someone. I've worked with people I didn't like. You just deal with that. You're not going to like everyone. But it's harder if you don't trust someone. I have left jobs because I didn't feel like I could trust my bosses to do what was best for me.
The Gift makes you not trust the magus, not just dislike him. That's where I run into the problem.
I would say the example above about magi earning trust are definitely valid, and modeled in the covenfolk loyalty rules.
On the other hand, just because someone does something kind for you doesn't mean they are a great person. Mafia do "favors" all the time that they then call the debts on. How many people work for corporations that make their lives better between salary and benefits but still feel like they are selling out, or working for a villain? Someone new to a covenant might realize their lives are objectively better but still spend years waiting for the other shoe to fall...
or saving a man's wife might tick up his personal loyalty score, at least towards that particular magus. Which is still a long ways from negating the Gift.
That's because you have options.
Covenfolk are described as being some degree of desperate and magi are also pretty desperate for covenfolk. It's been talked about how covenants, especially player ones, tend to be extremely progressive and that a factor in covenfolk retention is "this is basically paradise compared to the world at large, even discounting that out there I would be locked up/killed/enslaved." For the first few years you're certain that the wages they pay you are hush money for something, nobody would be that generous, but hey, it is a lot of money. You think the pension is probably fake, its easy to make promises like that, but then you see it getting paid out to people. You see a guy have an arm regrown and a real bad case of pneumonia cured in an instant, and sure, the magi are only doing that to keep you useful to them, to keep you loyal, but they're still doing it, and as the years go by you the other shoe does not seem to be dropping, or at the very least, there's been no negative consequences for whatever is going on.
The loyalty mechanics in Covenants are good for showing that trust is hard earned and very easily lost, but it can be earned. It turns out when the alternative is dying from a disease/wound/childbirth and someone that you do trust is telling you its ok, you'll let them use the MuCo 10 Forceps of Safe Labour the magi made.
If its the Blatant Gift then you'll need some convincing, after all, they're probably going to do something weird to you and your baby, I heard they can take away your free will, or maybe the baby will have a frog's face, or that won't happen because in 5 years they're going to come and steal your baby, saying that you owe it to them because without their help the child wouldn't exist.
Damn, we even used the same metaphor!
I agree that things are different for covenants. I was thinking more along the lines of people the magus might meet out in the regular world--a merchant, an innkeeper, a priest, etc. They may have options and they may be able to distance themselves from you more easily. If the innkeeper doesn't trust you, he might not let you stay at his establishment. Yes, he'd like the business, but not if he's worried that you'll rob or kill his other guests.
I think the big thing with covenants or redcaps is the constancy of contact and the explanation of why you feel creepy about them. As you say, when month after month and year after year goes by with nothing bad, and even some good things, your mind might convince you that the plusses outweigh the minuses, even if your gut keep telling you the guy's not trustworthy. And once you start seeing some weirdness, it may be easier to accept that maybe it is a magical thing that's causing it.
One thing that would likely help is that people who encounter lots of Magi will quickly realize that almost all of them cause the exact same reaction in everyone. Noticing that mass and consistent reaction doesn't make it go away, but it does make it easier to ignore.
Redcaps are the extreme example, seeing dozens of individual Magi every year. When you are dealing with dozens of individuals every year who trigger the exact same subconscious reaction, even if they are all individually very different, it becomes fairly easy to lump in as "effect of being a Magi".
And at the other end, you have the individuals who have never encountered someone with the Gift before. With a sample size of one, the Gifted is just "personally" creepy and untrustworthy. An exceptional reaction they have never experienced from anyone else.
That's the described reaction for First Impressions of the Blatant Gift in the core book, that you will have the door slammed in your face and that they'll threaten to call the watch if you don't go away. The regular Gift gets "this guy is sleazy and sucks, he's got money, but I bet he got it by swindling people, I'll charge him double and make sure he doesn't swindle me" and then you keep going there and eventually the innkeeper will welcome you enthusiastically, even if he does put you in a corner so you don't upset any of his other customers.
Which makes me think Redcaps must sometimes have the opposite problem (and have to talk about it in Redcap training). "This guy I just met creeps me out, oh he's probably a mage, it's fine, oh wait a minute this ale tastes funny ..."
Or at least he'll welcome your money enthusiastically. I always figured it would be more like: "Well, he's probably a liar and a cheat but he's never cheated me. So long as I keep a close eye on him and keep him away from my other guests, it's worth having him here. He always takes my most expensive room as well as two others for his travelling companions. I don't want to turn that kind of business away."
That sums it up very well!
It's interesting to note that the effects of The Gift seem to be wholly sensory.
Learned Magicians avoid the social penalties by communicating via correspondence. So, if you get a letter from someone with the Gift there's apparently no social penalty.
Sorcerers of Soqotra avoid the Gift penalties when meeting together by each sitting in a niche where they can't be seen by each other, then each addressing the big serpent-spirit (who is unaffected by the Gift) and he in turn conveys what they want to everyone else sitting in their own niches. So, out of sight is out of the Gift's social effects.
This has some weird implications for how people react to the Gift. If you're having an audience with a noble he's going to think very poorly of you while you're in his presence. When you excuse yourself to the privy he'll think better of you, then when you return he's back to thinking you're bad. Send him a letter instead, and it'll go much smoother. And after you leave he'll not be as poorly inclined to you.
The order would love the internet
Ouch! Lots of trusting little magi cozying up with each other ... and then they find out they didn't even know with whom. Demons love the internet even more! 
Of course if you don't know why it is being used, hiding yourself can be just as suspicious.