Hehe nice pic. I wish they had more "just for fun" equiptable badges like that in the game. (They should of had one for the fire flower color scheme in my opinion) I also like how those ones don't cost any BP to use.
In Paper Mario you collect badges that give you different abilities and such. A Luigi badge gives Mario Luigi's color scheme. There's a Wario one too, and using both at once gives Mario Waluigi's colors. They don't do anything else, just a change from the usual red and blue.