I have not found anyone who really knows. I believe it is yet another item (of many) that falls into the following category:
No Known Purpose Yet, Maybe Was Added With A Purpose But We're Not Sure
However, items like this should not be casually discarded because any of them can suddenly become very valuable if a GM Auction is announced and an item like this is designated by a GM. So one time it was Fuzzy Paintings, and another time it was Black CoC Badges.