The Sun ( UK) has a report from General Geumes, Argentina indicating the town is being visited, and intimidated by a mysterious “gnome.” Additionally, this devious little fellow was captured on video, unfortunately it’s not available for embedding.
Jose Alvarez who shot the cell phone video had this to say… “One of my friends was so scared after seeing that thing that we had to take him to the hospital.”
I will try and keep an eye out for follow ups on this. Pretty awesome story, true or not, and the video is a great addition to what will no doubt become a legend with some legs in the area.
– Prof. Gruntsplatter
Professor Gruntsplatter's Spookatorium 
I saw this on Fark the day it went online. It was so disconcerting yet hilarious that I had to show all my friends, and they had to show all their friends. I even have a little dance and impression of the Gnome I do when I’m bored. The South American Shadow Gnome has become a running joke with me and my friends. We’re even working to make it an internet phenomenon (along the lines of All Your Base, or Firing My Lasers). We’re developing webcomics, flash animation, youtube parodies, photoshop pics, and rap songs that all references the Gnome. We hope it will catch on because that things is creepy.