Nope, the State never looks stupid. It can be wrong and survive, it just can't be ridiculous. Government can stand criticism, it can stand wrong conduct, it can even stand outright criminality- the one thing it can't stand is laughter.
They will kill you for making them look stupid. And they will do their best to take it out on the poor rubes that put up these signs.
Oh, and as for the chances of these two advertisers getting convicted of anything - its a slim chance in hell. I have seen the signs and nothing about them looks dangerous to anyone but a complete moron. A Lite Brite with batteries.
Worth repeating.
If the public reaction was "whew, just a mistake, carry on" there wouldn't be an issue. Instead, people laughed - and so someone had to go to jail.