The wooden peg is like a giant cello-style friction peg with a geared metal collar around the base. Its the middle step between friction peg and mechanical tuner. The wooden shaft is a fair bit lighter than the metal equivalent and will consequently have an effect on the sound.
Try a search for 'hatpeg tuners' in the Setup & Repair Forum - this was discussed a few months ago.
And yes, some people think they're beautiful.
