One of the huge advantages of doing your own projects is you can focus on real value and not the shiny things that make a suit's eye light up.
This "Cool Cam" story has a lot in common with the Bike Shed story. In both cases the no-vision executives latch onto small mostly-pointless things they can understand. Real users are much smarter.
My reading was that the Cool Cam galvanised the management and the dev team, when they were feeling pretty stuck. It gave them a taste of the coolness that the project would be when done.
I sometimes do something a little similar, say I'm bogged down in something frustrating and complex, knocking up a protoype of something cool can breathe new life into a project. But its entirely possible that you're better at keeping yourself motivated and focused (without shiny things) than I am.
Galvanized is definitely the most positive way to read into it. This wasn't a fun project by the developers. This was for the executives who were torturing the developers like cats do mice. One smart developer put a ball of yarn out to keep the cats busy long enough to get the cheese.
This was a hack for their crappy executive problem. Exactly what you can avoid on your own projects. I totally agree side projects can be a good for motivation, but it's probably a bad sign if it's necessary to the life of the project.
This "Cool Cam" story has a lot in common with the Bike Shed story. In both cases the no-vision executives latch onto small mostly-pointless things they can understand. Real users are much smarter.