I've put a Fender decal on my Squier VM '77 Jazz. But only after replacing the pickups with new Fender Vintage ones, Fender pots and an original Fender neckplate. I'm planning to replace the tuners with Fender Vintage '70's, and replacing the Gotoh 201 it's got now with a Fender MiM one I've got laying around - everything but the wood and tuss rod will be original Fender parts. I know this doesn't make it a real Fender, and I'm never going to sell it as a Fender. I've kept the serial number and "Crafted in Indonesia" at the back of the headstock. You could argue that even if I sell it to someone as a modded Squier, that that someone could one day try to sell it as a real Fender. Even though I see a vague moral dilemma there, it won't be my responsibility. Not more than if I sold a bass with the Squier decal, and the buyer replaced it himself.
The reason I did it, is that I think the bass just looks better with a Fender logo. Call me a shallow gear snob, but I'd rather play live with something looking (and sounding!) like a Fender. But if I did nothing to the Squier except replacing the neck for a Fender one with a Fender decal, so that it played like a Fender but sounded like a Squier, it would somehow be OK with everyone. That puzzles me...
I would be really stupid to sell this bass; there's no way I could get back even the money I've spent upgading it. A new VM '77 costs about $520 here in Norway and when I'm done with it, it'll have cost me nearly $900 (before you scream, remember that everything needs to be imported, is more expensive here and wages are more than equally higher). Well, I could have bought a new Fender for that, but now I'm "making" one to my own specs instead. I would probably just get about $300 for it if I sold it, so I would have to be pretty desperate to do that.
Copyright laws (and even laws in general) seems to be very different here from the US - atleast from what I've read here. There is absolutely no way a company could sue me for doing something like this to a product I've bought and own. If I were to put an Audi logo on a Volkswagen, there is no one to stop me. If Audi sued me, it would have made the whole continent laugh. What I do with my Squier bass is completely my own business. If I were to do it commersially, it would be a totally different matter though - and of course - if were to try to sell it off as a genuine Fender. Which again, would be double stupid, since I would't even make a profit.
As for the OP's decal, I think it's a really great idea and would easily use one of them instead of a replica.