The original intended use is for getting people who don't think critically to buy more crap, though given Gibson's Law ("the street finds its own uses for things"), it could be only a matter of time before muggers/home-invaders start using the technology.
IMHO, The subtext of this type of ad says "we think you're gullible". Whether or not it is meant seriously or humorously, it wouldn't make me any more likely to buy the product.
Also, are you absolutely sure that you could, in all possible cases, tell whether something outside your peephole is a person or a printed piece of cardboard? For one, you're looking through it with one eye and have no depth cues to go by. If you looked at it for, say, five seconds and noticed that it doesn't move, you'd know something was funny, though expecting people to look through a peephole for such a length of time is about as feasible in the real world as expecting them to memorise 10-character random passwords. It's a good ideal, but too easily sabotaged by convenience (here, being in a hurry to open the door).
Who looks through their peephole before existing their door unless someone has knocked? How does this actually work? Someone knocks then runs off giggling like a schoolkid?
I could see this device being used by home invaders in the following way:
* Wait for it to have been used "legitimately" for a while
* Stick one on a door you wish to invade, knock and hide somewhere close
* Person comes to door, looks out, gets annoyed at another eyehole spam and opens the door to rip it off
* Run at door, get inside, be evil.
While I hate advertising in almost all forms, barring cleavage (women advertising themselves), I'm not such a ninny to state that this device is somehow evil in the sense that the muggers/home-invaders would use this technology. If you are dumb enough to look through a peephole and be convinced by a piece of cardboard that is unblinking and unmoving, then you Darwin's Law states you and your kind should not survive.
I seriously disagree that this is any more invasive than any other form of advertising, it certainly is no more deceptive than any other form of advertising, and it is as intelligence insulting as, say, Southpark. Both of those make me laugh. These two pictures have made most of the people I've showed it to laugh out loud.
This is, to me, an intelligent and creative production, like much of advertising often can be, albeit with an annoying intent.
For the record, my favorite movement in art these days is documented on woostercollective.com.