Unfortunately what they are actually trying to advertise is their own competing phone. The series of Internet ads being planned by Sprint could end up costing them a lot of actual money. And as each of them show the competing product. Sometimes the way to create a buzz in marketing is to break the rules. The unwritten rule that mentioning the competitors product in your advertising causes your audience compare when they might not have. This is generally to your detriment so is usually a risk not taken by marketers.
I am being a bit glib here, in this case this might be one of those exceptions to the rule. When a particular product is so dominant within a market that it becomes a defacto choice, then aligning your product with that competitors name gets you into the perception of customers that might not have even looked elsewhere. In this case the iPhone is so much part of the geek zeitgeist that there have been many that have bought it without considering anything else and despite some of its flaws, like not being 3G.
This is also a less risky move by Sprint because the iPhone is not really a competitive product for them. What they are really competing against is the AT&T network. The dynamic of the market though, is that an exclusive contract for a popular product is temporarily skewing the market. Sprints aim is probably more to cause people who might not even consider alternatives before walking into the Apple store to realise that other possibilities exist. This gets them thinking about the other factors they are ignoring in choosing an iPhone locked to the AT&T network. When the network is not being considered Sprint aren’t even in the game so they need the decision on the phone to be harder so they have a chance.
Given that Sprint will eventually get a future version of the iPhone any positive effect on the Apple brand is probably not a bad thing for them in the long term anyway.
While Gizmodo clearly think this idea is all bad, I can see some sense to it. The main problem I see is that it is too late. The majority of the people who will buy an iPhone regardless of what else is out there is probably mostly gone. There might be a core potential market that have been witing for a plan to run out before buying if they are lucky. They have a much better idea of the market dynamics than I do, I hope.