I wanted to test this in a more controlled fashion to be sure, so I used this playbook:
---
- hosts: localhost
connection: local
gather_facts: no
tasks:
- command: echo -e out in the open
- command: echo -e blah my secret
no_log: True
This is my console output
tom@hamlet:~/tmp/ansible ANSIBLE_LOG_PATH=no_log.log ansible-playbook no_log.yml -vvv
PLAY [localhost] **************************************************************
TASK: [command echo -e out in the open] ***************************************
<localhost> REMOTE_MODULE command echo -e out in the open
<localhost> EXEC ['/bin/sh', '-c', 'mkdir -p $HOME/.ansible/tmp/ansible-tmp-1421353307.68-66582777801017 && chmod a+rx $HOME/.ansible/tmp/ansible-tmp-1421353307.68-66582777801017 && echo $HOME/.ansible/tmp/ansible-tmp-1421353307.68-66582777801017']
<localhost> PUT /var/folders/4z/l8ng_d2n7mx61pfvhmf2r41m0000gn/T/tmpf6o4Mg TO /Users/tom/.ansible/tmp/ansible-tmp-1421353307.68-66582777801017/command
<localhost> EXEC ['/bin/sh', '-c', u'LANG=C LC_CTYPE=C /usr/bin/python /Users/tom/.ansible/tmp/ansible-tmp-1421353307.68-66582777801017/command; rm -rf /Users/tom/.ansible/tmp/ansible-tmp-1421353307.68-66582777801017/ >/dev/null 2>&1']
changed: [localhost] => {"changed": true, "cmd": ["echo", "-e", "out", "in", "the", "open"], "delta": "0:00:00.006201", "end": "2015-01-15 22:21:47.848086", "rc": 0, "start": "2015-01-15 22:21:47.841885", "stderr": "", "stdout": "-e out in the open", "warnings": []}
TASK: [command echo -e blah my secret] ****************************************
<localhost> REMOTE_MODULE command echo -e blah my secret NO_LOG=True
<localhost> EXEC ['/bin/sh', '-c', 'mkdir -p $HOME/.ansible/tmp/ansible-tmp-1421353307.86-275694889373920 && chmod a+rx $HOME/.ansible/tmp/ansible-tmp-1421353307.86-275694889373920 && echo $HOME/.ansible/tmp/ansible-tmp-1421353307.86-275694889373920']
<localhost> PUT /var/folders/4z/l8ng_d2n7mx61pfvhmf2r41m0000gn/T/tmpabg4Bx TO /Users/tom/.ansible/tmp/ansible-tmp-1421353307.86-275694889373920/command
<localhost> EXEC ['/bin/sh', '-c', u'LANG=C LC_CTYPE=C /usr/bin/python /Users/tom/.ansible/tmp/ansible-tmp-1421353307.86-275694889373920/command; rm -rf /Users/tom/.ansible/tmp/ansible-tmp-1421353307.86-275694889373920/ >/dev/null 2>&1']
changed: [localhost] => {"censored": "results hidden due to no_log parameter", "changed": true, "rc": 0}
PLAY RECAP ********************************************************************
localhost : ok=2 changed=2 unreachable=0 failed=0
and the contents of no_log.log
2015-01-15 22:21:47,596 p=1876 u=tom |
2015-01-15 22:21:47,596 p=1876 u=tom | /usr/local/bin/ansible-playbook no_log.yml -vvv
2015-01-15 22:21:47,597 p=1876 u=tom |
2015-01-15 22:21:47,664 p=1876 u=tom | PLAY [localhost] **************************************************************
2015-01-15 22:21:47,664 p=1876 u=tom | TASK: [command echo -e out in the open] ***************************************
2015-01-15 22:21:47,677 p=1876 u=tom | <localhost> REMOTE_MODULE command echo -e out in the open
2015-01-15 22:21:47,680 p=1876 u=tom | <localhost> EXEC ['/bin/sh', '-c', 'mkdir -p $HOME/.ansible/tmp/ansible-tmp-1421353307.68-66582777801017 && chmod a+rx $HOME/.ansible/tmp/ansible-tmp-1421353307.68-66582777801017 && echo $HOME/.ansible/tmp/ansible-tmp-1421353307.68-66582777801017']
2015-01-15 22:21:47,730 p=1876 u=tom | <localhost> PUT /var/folders/4z/l8ng_d2n7mx61pfvhmf2r41m0000gn/T/tmpf6o4Mg TO /Users/tom/.ansible/tmp/ansible-tmp-1421353307.68-66582777801017/command
2015-01-15 22:21:47,731 p=1876 u=tom | <localhost> EXEC ['/bin/sh', '-c', u'LANG=C LC_CTYPE=C /usr/bin/python /Users/tom/.ansible/tmp/ansible-tmp-1421353307.68-66582777801017/command; rm -rf /Users/tom/.ansible/tmp/ansible-tmp-1421353307.68-66582777801017/ >/dev/null 2>&1']
2015-01-15 22:21:47,859 p=1876 u=tom | changed: [localhost] => {"changed": true, "cmd": ["echo", "-e", "out", "in", "the", "open"], "delta": "0:00:00.006201", "end": "2015-01-15 22:21:47.848086", "rc": 0, "start": "2015-01-15 22:21:47.841885", "stderr": "", "stdout": "-e out in the open", "warnings": []}
2015-01-15 22:21:47,860 p=1876 u=tom | TASK: [command echo -e blah my secret] ****************************************
2015-01-15 22:21:47,861 p=1876 u=tom | <localhost> REMOTE_MODULE command echo -e blah my secret NO_LOG=True
2015-01-15 22:21:47,863 p=1876 u=tom | <localhost> EXEC ['/bin/sh', '-c', 'mkdir -p $HOME/.ansible/tmp/ansible-tmp-1421353307.86-275694889373920 && chmod a+rx $HOME/.ansible/tmp/ansible-tmp-1421353307.86-275694889373920 && echo $HOME/.ansible/tmp/ansible-tmp-1421353307.86-275694889373920']
2015-01-15 22:21:47,872 p=1876 u=tom | <localhost> PUT /var/folders/4z/l8ng_d2n7mx61pfvhmf2r41m0000gn/T/tmpabg4Bx TO /Users/tom/.ansible/tmp/ansible-tmp-1421353307.86-275694889373920/command
2015-01-15 22:21:47,873 p=1876 u=tom | <localhost> EXEC ['/bin/sh', '-c', u'LANG=C LC_CTYPE=C /usr/bin/python /Users/tom/.ansible/tmp/ansible-tmp-1421353307.86-275694889373920/command; rm -rf /Users/tom/.ansible/tmp/ansible-tmp-1421353307.86-275694889373920/ >/dev/null 2>&1']
2015-01-15 22:21:48,008 p=1876 u=tom | changed: [localhost] => {"censored": "results hidden due to no_log parameter", "changed": true, "rc": 0}
2015-01-15 22:21:48,009 p=1876 u=tom | PLAY RECAP ********************************************************************
2015-01-15 22:21:48,009 p=1876 u=tom | localhost : ok=2 changed=2 unreachable=0 failed=0
In conclusion, with no_log specified, the command and its arguments are still written to stdout and the log file.