Hallucinate is a roleplay effect which affects all of the user's perceptions, not just their sight. A blindfold might block out visual hallucinations (or it might not), but it would not block out the character's other senses - which are also affected by the Hallucinate.
It is up to each player how they choose to roleplay this ability. It is entirely possible that they could pick a lock, but the character would most likely experience it in a very different manner than they normally would. Players who have their characters "skip" all effects from Hallucinate and perform all of their normal tasks with no issue and no value-added roleplay are likely violating the spirit of the rule on this effect and may invite a conversation with a Marshal. That said, there is no prohibition to a player succeeding in some or all of their attempted tasks and usage of Game Abilities while under the effect of a Hallucinate, and (like other roleplay abilities and affects) we expect all players to respect the intent of this effect when under its effects.
-Bryan Gregory
ARC