Let us explain a few concepts that we often take for granted in order to clarify this issue.
The beracha that we make before the Torah reading is primarily a birkat haTorah, a beracha related to Torah study. The Tur[1] cites a question raised by his brother, R. Yechiel, concerning a case where one arrived late to shul and, as soon as he finished making his own, personal birkot haTorah, was called to the Torah. May he immediately make the same birkat haTorah again? Their father, the Rosh, said that the oleh may make the beracha because there is a set takana (a convention) to honor the Torah by making a blessing before and after its public reading.
The Rosh, however, does agree that the nature of the berachot of the oleh is that of birkat haTorah. Therefore, one does not need a tangible, open text upon which to make a birkat haTorah. Rather, it relates to the intangible mitzva of Torah study, whether of the Written or Oral Law.[2] Thus, even if covering the Torah were to make it as if it wasn’t there, there would be no problem with reciting a birkat HaTorah. The reason that, before the oleh recites the beracha, we open the Torah and point to the place of the reading is in order for him to know what will be read.[3] This, obviously is unnecessary after finishing the aliya, since the oleh knows upon what he is making the beracha, namely, what has just been read.
The Torah is covered between aliyot primarily out of respect for the Torah when it is, temporarily, not in use.[4] There are two ways to cover the more important part of the Torah – its words. One way is to roll it up; the other is to cover it with something external. The implication of the Rama[5] is that rolling is a better covering than placing a cloth upon it.[6]
There is good reason to cover the Torah in some manner before reciting the concluding beracha; it should not appear that the beracha is written in the sefer Torah.[7] For this purpose, a single covering, accomplished by rolling, is sufficient. After the beracha, some place a cloth upon the rolled Torah, especially if there will be a long break.[8] However, the extra covering does not affect the beracha in any way.
Regarding your comparison to challot, it is interesting that there are those who specifically instruct that they be covered even during the beracha.[9] In both the case of the Torah and that of the challot, we preferably hold the object to which the beracha relates. Among other things, this connects us to them. In any event, the beracha is valid (in both cases) even if we neither see nor touch the object at the time of the beracha.