Looks to be a 1940s Exhibit Supply Viewer or Peep machine. There were a bunch of variations. Obviously it appears the original glass has been replaced with this homemade version. Images inside are usually a comedic diorama. Often times a play on words and not necessarily the sexy scene you'd expect.

I have one titled "When Will You Marry and Find Love in a Cottage." It shows a pick of a perky cutie in front of picturesque house greeting her loving husband. You look inside to see a lady with a big butt bending over doing laundry in a tub in the ramshackle back yard. Mines mechanically animated. Some are not. I have a friend that has another that says "Things a man should avoid." The glass has a picture of a man smoking a cigar, a martini nearby and a pretty gal on his lap. Inside is a diorama with a noose and electric chair I think.

These machines are a neat novelty and fairly hard to find. I got mine in a package deal and sold off many of the other items, so at this point it's almost free. The few others I've seen for sale were in the $800-$1000 range. I'm guessing one like the project Chris saw would be much cheaper. I'd have been interested...