No, you're not wearing a belt under your pants, although congrats for even being able to picture that - I don't think I can summon up that image.
The holster is inside your pants and belt, with the loops or other attachment coming over the top of your pants and the belt going through or over that point.
On the subject of kydex and leather combinations, here is a good one in that field: the Tucker Gunleather holster called "The Answer." It certainly doesn't have the style of the leather Milt Sparks, but it is "tuckable" and is also a very comfortable design. That means that only the bottom of those hooks is visable to somebody looking at you since you have now tucked the shirt between the holstered gun and the top of your pants. You have to grab your shirt and pull it up and out to get to the gun, but it also means you can wear a tucked in shirt.
Speaking of t shirts and jeans, I just got back from the store with my P99 conpact in a IWB holster in jeans and a white t shirt covering it. My aforementioned Milt Sparks belt kept it tight to me and nobody was the wiser.
The Tucker Gunleather "The Answer" holster:
