I do like the idea that it turns emoticons into real expressions of emotion. When you actually see a ":)" or an "lol" in someone's IM or email, you never really know if they've actually smiled or laughed at what you've typed earlier, and a program like this puts a little more power behind the colon and parenthesis. As the app's description says, using it can go a little farther towards "enforcing honesty in your online communication." The app is a free download for US, UK, and NL keyboards on the Mac.
The app was featured on Wednesday's TUAW TV Live, which you can watch to see AutoSmiley in action.