How does this illusion work?

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Found this on Fark.

I can also kinda reproduce the effect if I stay sitting at my laptop and cross my eyes while looking at it, which leaves me even more .

[Squink]

Hybrid Images at MIT

Hybrid images change interpretation as a function of viewing distance. In the example above, you might think that these people are sad. But ask someone to tell you what the expressions are while she sees the picture from a few meters away.

Details disappear as you move back from the images, and large blocks of shadow and light are no longer washed out your perception by those details; (good pdf description here).
This illusion looks like it’d be a fairly simple implement in Photoshop. Perhaps we’ll see it used to good effect in TV ads in next year’s presidential campaign? At the right level of subtlety it’d be deniable.

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Thanks

[BACI]

Also New Scientist magazine did a story on this effect in the current issue.

Cheers

M