In your citation, the Buddha sees the Tathagatagarbha hidden in all beings-yet he also knows it is hidden. He sees the closed lotus, he sees the kleshas as well.
Buddhas, being omniscient, would therefore of necessity be able to perceive the confused appearances ordinary ignorant beings perceive, as well as the pure nature of sentient beings and the pure nature of the environment, of appearances.
So Buddha hallucinates as well? Confused appearances do not appear to a Buddha's pure mind.
In a lot of Chinese and Asian Buddhisms that stress the interpenetration of natures, Buddha is believed to have all natures within himself, including the natures of delusion and suffering. He is not understood as trapped in these natures, and it is not understood that delusion and samsara arises from within the Buddha as suffering, but rather, that he is necessarily still capable of the potentiality toward manifesting
deluded vision in order to minister to deluded beings. The difference with the Buddha is that the Buddha is immune to the delusional effects of manifesting deluded vision, it does not effect the Buddha, since potentiality toward manifesting deluded vision
is not necessarily constant manifestation of deluded vision as a result of ignorance
If one contextualizes "seeing", as it is presented in "Tsongkhapafan's" statements, I can certainly see how someone may claim that Buddha does not "see" delusion, if "seeing" is understood as "grasping-action at the cakṣurvijñāna
". In this reading, he would recognize suffering, without needing to "see" it. Its a bit of a contrived reading, however, but that is how I contextualized "Tsongkhapafan's" statement.
In reverence for the root gnosis of the heart, the dharmakāya,
for the ever present good law of the heart, the lotus terrace,
for the inborn adornment of the trikāya, the thirty-seven sages dwelling in the heart,
for the that which is removed from seed and fruit, the upright key to the universal gate,
for all boundless concentrations, the sea of virtue, the root perfection,
I prostrate, bowing to the hearts of all Buddhas.
胎藏金剛菩提心義略問答鈔, Treatise on the teaching of the gnostic heart of the womb and the diamond, T2397.1.470c5-8