Are folding handlebars a good idea from an engineering standpoint?
Well, from an engineering standpoint, no. It increases complexity, cost and weight. Those might be a deal breaker for the commuters who would likely use them. From a practical standpoint, maybe. @NL_Derek; you could be the first to test one!

In conjunction with other folding components (frame like a Dahon &amp; pedals), it may suit the users need, imagine putting your bike in a suitcase.

If we assume that the design criteria are such that we need a folding handlebar, nothing here jumps out at me as anything that could not be adequately addressed with quality engineering. You could say a folding bike or folding pedals appear to be very dangerous, but if they are well engineered and manufactured with quality, there is nothing inherently dangerous about them. Whether this particular item is well made, can't say. @RoboKaren, I'd agree that something other than the threaded connection between the two halves might be better unless it has some measure preventing it from loosening unexpectedly, like a cam-lock mechanism of some sort.

Just for kicks, I modeled up what in my estimation would be a sturdy hinge assembly, if made with the right materials, roughly copying the design of what is shown in the picture. I don’t have time to do a joining detail though…