Paranoid Linux used to do something similar. The concept was lots of seemingly real browsing traffic would be randomly generated through your computer, and this would add a significant amount of noise to the total web browser traffic to your machine.
See also "TrackMeNot" - (http://cs.nyu.edu/trackmenot/) which is a browser extension to generate realistic fake traffic.
I haven't seen any analysis of this extension, but I suspect it'd be trivially easy to split the fake traffic from the real traffic. I guess it has an annoyance factor if people have to store your traffic data.
