It is almost universal that Mezuzot are affixed to doorposts by rolling it up tightly and inserting into some protective case.
The Rambam writes in Hilchot Mezuzah 6:13 that encountering a Mezuzah should be a profound experience:
חייב אדם להזהר במזוזה מפני שהיא חובת הכל תמיד וכל זמן שיכנס ויצא יפגע ביחוד השם שמו של הקדוש ב"ה ויזכור אהבתו ויעור משנתו ושגיותיו בהבלי הזמן וידע שאין דבר העומד לעולם ולעולמי עולמים אלא ידיעת צור העולם ומיד הוא חוזר לדעתו והולך בדרכי מישרים
People must be very careful about the mitzvah of mezuzah because it is an obligation on everyone at all times, so that any time they go out or come in, they will brush against the unity of the name of the Holy Blessed One and remember God's love and wake up from their sleep and errors in the futilities of daily life and know that there is nothing that lasts forever except the knowledge of the Rock of Ages. And they will then immediately return to their true knowledge and and walk on the right path.
It's hard for me to have that experience when the Mezuzah is unable to be read. Personally, I think I would more successfully achieve this level of awareness if I was able to actually see the writing of the Mezuzah each time I passed through the doorway.
According to a Safrut website, stam.net:
It is not proper to roll the mezuzah inside out or to leave it unrolled in order to be able to view the lettering.
Halacha requires that the scroll should be rolled from left to right i.e. the word "Echad" going to "Shema". Although the posture spread out flat does not invalidate it, for it is kosher after the fact, still it must be fixed.
Personally the SA's lashon there sounds circumstantial to me, not intentionally halachic, especially if seen in light of Rambam. The author above presents his interpretation as a given.
What is the source for this, and is there any debate surrounding this issue? I would probably encase the parchment in two glass sheets as protection.
Rambam seems to take for granted that you will be rolling it up, but does not specify if this is more desirable or just the way it has always been done.