Still to solve: [HALF SOLVED]
* Eliminate the stupid line that auto-hide leaves with some maximised applications, such as Google Chrome
HALF SOLUTION -
If you move the taskbar to the left or right edge prior to doing the above steps, you don't get the stupid auto-hide line at the top or bottom of Goggle Chrome. Since the native taskbar is not mouse sensitive anymore, it won't impact your use of hot corners, or multi monitors (for instance i have the native taskbar on the left of my middle monitor, and it does not popup when moving between monitors using the steps in this post).
Okay, I think I have finally - finally - got a workaround that:
* Keeps the native Windows 7/8 taskbar hidden for your session (you do have a couple of steps you need to do on start-up each time, or if you manually un-hide the taskbar).
* Prevents the native Windows 7/8 taskbar from opening with popups or programs seeking attention (flashing taskbar thing).
* Prevents the native taskbar from being mouse sensitive (i.e. despite auto-hide, it will not appear when you mouse over the hidden taskbar anymore).
* Allows you to use the screen area that is occupied by the native taskbar (this is the problem of not combining Taskbar-Hide with the autohide setting; you can't use that screen real-estate).
* Allows you to run alternative taskbars that are dependent on keeping the native taskbar functional (for instance Dislay Fusions Multi-Monitor Taskbar + [Settings >> Advanced Settings ?> 'Show On All Montiors'])
One Time Steps:
1) Download and run this registry edit to prevent balloon notification popups from the native taskbar/system tray:
Notifications - Enable or Disable Message Balloons - Windows 7 Help Forums
(You can open this in notepad to see what changes it will make prior to installing it, if you want).
2) Download and run Taskbar-Hide from here:
Hide Taskbar : Hide Taskbar in Windows 8 | 7 with a hotkey
Optional:
An alternative you can try is here:
Remove Taskbar 100% - Windows 7 Help Forums
3) Set the taskbar to auto-hide
Optional:
3) B) Add a shortcut to Taskbar-Hide.exe in your startup folder, to have it launch automatically with windows on startup (you still need to use the Ctrl+Esc hotkeys to activate the functions of taskbar-hide - though you could also script this if you were really keen).
Startup Folder:
C:\Users\{User Name}\AppData\Roaming\Microsoft\Windows\Start Menu\Programs\Startup
Steps to hide taskbar after each start-up or manually un-hiding using Taskbar-Hide
4) Make sure Taskbar-Hide is running.
5) Make sure the taskbar is in it's auto-hide state (i.e. you'll have to look at any programs that are currently seeking attention).
6) Once the taskbar is 'auto-hidden', press the hotkeys for Taskbar-Hide (Ctrl+Esc)
[This should mean that the native taskbar area is no longer sensitive to mouse activity]