I've been writing a paper on The Sorrows of Young Werther, and it has occurred to me that there are some interesting similarities between Werther and the sort of idealism that accompanies intrusive augmented reality at the levels of Eclipse Phase or similar science-fiction in which people are capable of using augmented reality to "retexture" their world, and see something which is very different from true reality. Unfortunately, this would probably be detrimental to my paper as an exercise in analyzing the text and go on far too wild a tangent.
Standing by itself, augmented reality is not self-deception. It is quite simply a useful tool, as people with certain smartphones may have experienced (and anyone who's played the majority of video games is familiar with), the ability to overlay data above real-world visual feeds allows for unique possibilities in civilian (it's like a GPS that inputs directly to your field of vision) and military use (easily evidenced by looking at footage from Deus Ex: Human Revolution, the modern reboot of Syndicate, any of Tom Clancy's Ghost Recon series, or Nuclear Dawn). Mind you, I'm focusing heavily on the optical elements of AR, there are non-optical elements as well. Assuming that you have internet to read this page, you could go and look up some of your own, but I refer to more invasive forms because these are required for any real form of self-deception; replacing the abandoned house down the street with an icon standing for an abandoned house is not enough, it must be possible to repaint reality.
Self-deception, on the other hand, is conscious and unconscious (often both mixed, though there are examples of entirely unconscious self-deception). Any self-deception using AR must be either conscious or accidental (external deception is not self-deception), so it would lead us to question its usage. For example, in Eclipse Phase people can use augmented reality technologies to "re-skin" life, whether it involves color grading and lighting adjustments or a full thematic change from a space station to a steampunk deep sea colony. Naturally, this presents some technical difficulties just in the interpretation and overlay of the appropriate images, but it also has a deeper hidden message that the user abuses augmented reality to change the situations around them.
Now the question arises of what the social impacts of such augmented reality are. Most people would probably change their environment in some way, even if it is just the color balance and lighting tweaks that are relatively innocuous, or filtering out expletives and obscenities. With that in mind, it is important to consider the ethics of augmented reality in terms of self-deception. On one hand, it proves invaluable for navigation, can assist in perception of everyday objects, and have breakthrough military applications, but is such a thing good for the general populace?
Naturally, this is a more philosophical question than anything else; I have no doubt that anyone reasonable would not outright ban augmented reality for its potential abuses no more than someone would ban a cheeseburger due to the potential of people overeating; while there are reasons to ban it the fault lies not in augmented reality itself but its uses. However, the exercise is a good one in my opinion; if we could let people see anything they want, rather than what truly exists, would we be willing to cope with consequences of that?