Is this an absolutely unfortunate design choice, or what? I imagine it's possible to think that some parent might want to buy a toucan hat for their kid, but it's hard to see how you could miss the implications. All it's missing are a couple dangling bits and it'd probably break obscenity laws.
Though, now that I think about it, maybe this is just an error in marketing. The person who made this shouldn't have been targeting it towards kids. She (or potentially he I guess) should have resized this for an adult and pitched it to those attending a gay pride parade. This could be a pretty popular item in that context. Hell, it's already rainbow colored. Just pluck off those eyes and there you go.
Since I've mentioned marketing, I'll bring up something else that's bugged me. There's been a facebook ad that has popped up a few times now and it gives me the WTF's each time I see it. Here's the ad:
Seriously. WTF? Is this the best picture you could find to appeal to your target audience and sell your product? It's about scholarships for dad's, right? Then why the flying frak does it look like it's targeting the Charlie Manson population? What sort of person looks at this picture and thinks, hey! I can relate to this picture and they must be talking to me. Hell, even if you do look like this, it's not like you want to lump yourself in with this guy. It's the same reason that beauty salons don't put up pictures of ugly people and then say things like, 'hey fugly, we can help you turn it around'.
I know that it's cheap to advertise online, but this is still throwing your money away IMO. Whoever came up with this ad campaign should just be fired. Though, based on the look of the ad chances are it's a scam being run out of someone's garage as it is.