Details: Say you're angry at your friend "dumbass" today. You want to post something about it to vent, but you don't want "dumbass" to read. You type in your entry, then, if you selected that option in your preferences, you can tick "dumbass" in a list of your friends to restrict that post easily. "Dumbass" has a friend on your friends list too, so you tick "superAOLer" too, for privacy. Then, when you hover over the little "lock" icon next to your post, it says "entry restricted to: Dumbass, superAOLer", to be sure the feature worked, and your privacy is respected, and feel secure about it all.
Pros: saves the hassle of creating a friends group just for one quick entry, inconvenient process that could use a better handling. Lots of users don't use the great friends group feature because it's too tedious to use for a quick post.
Cons: feature must be reliable not to end up in drama (if you thought the post was restricted but "dumbass" and "superAOLer" end up reading the entry you made)
Maybe a confirmation page before the post is made ? "your post reads: xxxxxxx and is restricted to: dumbass, superAOLer. Post - Edit)
A little code to add, and alt text to add to the lock icon
Update: to clarify something I may have left unclear: the post would still be a friends only post, so if the user you don't want to see reading your entry logs off or uses a new account, he/she will still be unable to read your post