My ribbon is absolutely for the soldiers, and only secondly for "my peers" here stateside to see. I have served 13 months in combat, and it absolutely makes a difference in the morale of our troops when their friends/relatives back home write them or tell them on the phone things like: "you should see all the signs of support here at home...yellow ribbons, american flags, bulletin board messages, signs in front of fast food joints, etc". It does nobody any good for them to hear things like "nobody even ackowledges that you guys are over there, you would never know the difference, no show of support for you back here, etc." The soldiers may not be here to see my ribbon, but they are still in tune enough with our society while deployed (especially with today's technology) to recognize what is going on. They very much appreciate your support.
As a secondary purpose, if people here stateside see it then maybe they will be inspired to think for a couple minutes at a stoplight behind me about our troops over there then great.
My wife can't see my wedding ring when I'm not around her either, but I still wear it. Is that supposed to be strange too?