Ghostscript merges annotations into the page content and simulates the highlighting with transparency effects. If the viewer doesn't support transparency, the highlighted area looks obscured, as reported.
Ghostscript should preserve annotations when it generates PDF, but flatten and simulate annotations for all other output files. Currently Ghostscript always flattens annotations.
PDF viewers that don't render this file correctly should support transparency. The text is visible in Acrobat Reader and Ghostscript itself.