Scriptable favicons can be useful and unobtrusive when used judiciously. For example, adding a small "1" in a red circle when a new message arrives. Sure, you could just replace the favicon with another image that has the number hard-coded into it, but that's a bit clunky and you'd need to prepare several different images.
When is the last time a web feature with the potential to annoy was used only judiciously?
I now expect the use of tabs to become impractical as half the websites on the planet start animating their favicons and I can't handle the distracting movement in the corner of my eye.
That took me a second to figure out how to rotate pieces. After leaving it alone a couple of times I've decided that it creates some pretty interesting patterns. It's not nearly as creative, but it would be neat if eventually favicons could be a little more useful and perhaps display something unique to the page that you're on.
And that was the end of my eyesite :-) But seriously, that's pretty amazing - I can think of a lot of useful ideas for this. Like a Facebook status update, or telling you that mail has been delivered.