The Boston Globe's article says:
Catch that last part--the police might have killed her for wearing an LED nametag.
Outside the terminal, Simpson was surrounded by police holding machine guns.
"She was immediately told to stop, to raise her hands, and not make any movement so we could observe all her movements to see if she was trying to trip any type of device," Pare said at a press conference at Logan. "There was obviously a concern that had she not followed the protocol ... we may have used deadly force."
AP and Information Week reported the device as a "fake bomb." It doesn't look at all like a fake bomb--if there was intent to do anything of the sort, I suspect it was to show how ridiculous the Boston authorities still are after the Mooninite scare. Would a jury decide that a reasonable person would think it was a bomb?
(Via Bruce Schneier's blog.)
UPDATE (September 21, 2007): I think this case is less absurd than the Mooninite one, where the devices were clearly professionally made to look like light-up cartoon characters. Questioning her was appropriate, but I don't think charging her was unless there is some evidence of intent to commit a hoax that hasn't yet been reported.
Bruce Schneier has previously reported a list of "terrorist dry run" items that TSA issued warnings about, in which each case actually had a valid explanation (though we still haven't seen what the explanation was for the "wire coil wrapped around a possible initiator, an electrical switch, batteries, three tubes and two blocks of cheese").
Odd, unexplained items are deserving of questioning and scrutiny, I think we can all agree.
UPDATE: Boing Boing has more details.