Yes, the crazies in San Francisco are at it again. But at least this idea is relatively benign. In fact, given the cramped quarters in that particular city, it might be a pretty good idea.
Actually, I did something similar once. When I bought my first condominium, rather than putting up a cut or a fake tree I bought a pine tree in a 5-gallon bucket and brought it home. I transfered it to a nice large pot, decorated it a bit, and it served as my Christmas tree that year. After Christmas I moved the pot out onto my patio/deck, where the tree stayed and grew, ever so slightly, for the next couple years.
When I moved I brought the tree with me. However, I didn't have anywhere to plant it and my dad's backyard looked like it needed a tree in one spot. Problem solved. When we pulled the tree out of the pot I realized why the tree hadn't grown so much--there was no more room in there for the roots to spread. It was like there was this thin coating of dirt over a mass of roots.
We planted the tree in 1997. It grew quickly, and now it's well over 20 feet tall now. All indications are that it's very happy in its new home.
Update: The link above no longer works. Try this one.