The reader would be able to know when a character is using haki by the fact that (s)he is able to land a blow against a logia user or the fact that the character mentioned haki during the fight-- which luffy has done numerous times in recent battles. There are many ways of portraying a character's use of armament haki. The character could state it as (s)he would a move: "Bushido Haki- Gomo Gomo no pistol". ~sorta like luffy stating gear second/third
Or the character could state after sustaining damage : "Damn, my haki wasn't strong enough to fully block that blow"
For Garp, maybe he was not quite master lvl at the time; then again maybe youre right. But for Oda to continue for another 6+years, i'd hope that the power scale would get bigger to the point where the use of haki is implied, and not shaded in. That moment with Garp was at Chinjo's best, not Garps best. So it still is possible for him to have attained mastery after that.