I haven't actually touched Liquid Paper since back in high school when I was still using a manual typewriter (truly), but here's a potential application: reader Jatacid says it's a handy way of making your headphone jack easier to locate in a dark or poorly-lit room.
Sometimes finding a headphone jack can be really hard at night or when it's in a poorly-lit place or behind something. A good way to help you find that elusive 3.5mm jack is to get some Liquid Paper (white-out), and carefully paint some around the edges. It makes it stand out in low light surprisingly well — I think because white-out is inherently opaque and reflective to begin with.
Should also be relatively easy to remove, though I'm guessing it might be more effective on black cords than classic iPod-style white earbuds. Thanks Jatacid!