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Presumably the intent would be to only have the sign on the near side, not on the outside so shouldn't affect overtaking.
That said, as always this depends on the driver being engaged enough to use it. The number of lazy drivers you seen in an average day who don't bother to indicate suggest that it would be worse than useless as all it would do is instill a false sense of saftey
branwen
@ 
^^ interesting link. And the bit before what you quoted isn't quite as bad as that. The goal of what he's proposing is to keep cyclists out of the way of a turning truckx, not to stop cyclists from passing trucks. Basically another indicator.
I'm not actually sure it's a bad idea.
In fact, on school buses like the one pictured, they also have arms which force the children to walk further away from the bus so they can't get into the driver's blind spot.
http://upload.wikimedia.org/wikipedia/commons/3/3d/Children_about_to_board_the_school_bus_(Thibodaux,_Louisiana).jpg
It's more akin to something like that, rather than the stop-sign.
(the legal aspect, which you quoted, is problematic though).