Okay, I'll bump my own thread with some more info...
The wording "official capacity and with lawful authority" exists in multiple places in the WI Statutes.
For example, 946.415(2) regarding Resisting and Obstructing: "... whoever knowingly resists or obstructs an officer while such officer is doing any act in an official capacity and with lawful authority is guilty of a Class A misdemeanor."
According to this statute, "Lawful Authority requires that police conduct be in compliance with both the federal and state constitutions, in addition to any applicable statutes."
So the issue of requiring to show ID appears to be a big-time gray area... LEO's are lawfully allowed to ask questions of anyone, for any reason. So therefore a LEO may ask anyone for their ccw license for any reason, and since the LEO is acting in official capacity and is not breaking the law, it appears the citizen must comply and provide ID.
On the other side of this argument, the conversation is entirely voluntary by the person being questioned unless they are being briefly detained due to the officer having "reasonable articulable suspicion that the person has committed, is committing, or will commit a crime."
So it's reasonable to conclude that, unless the person being requested to show ID is being detained, they are not required to have a conversation with the officer, and therefore they aren't required to comply with any requests of the officer - as long as they don't specifically obstruct the officer.
My thoughts... When a LEO asks for my permit, I'll be willing to discuss the matter, but I won't ID myself and I will have conveniently left my permit and ID in my Jeep, which won't be searched without a warrant. And we'll see how it goes...