The Origin and Significance of the Famous Graffito
Kilroy's bug-eyed face became a very common sight during the period of World War II. His strange peeping visage has since exploded into popular culture in literally thousands of places. No one knows for certain where the popular caricature came from, but there are a few things that are known for sure—and a few more that have appeared thanks to people with too much time on their hands.
It seems that Kilroy's appearance is based on an earlier graphic, popular in Britain. This character, called Mr. Chad, looks a lot like the peeping Kilroy figure, and his popularity spread to Australia, where he was called Foo, and often tagged "Foo Was Here" (Foo was popular by World War I, if not earlier). In Chile, a similar character was called sapo ('frog') because of his big frog-like eyes.
As to where Kilroy got his name, the most likely theory tells of a certain James J. Kilroy, an American shipyard inspector as the source. It seems the careful Mr. Kilroy marked the equipment he inspected with "Kilroy was here" in yellow crayon (chalk could be erased by unscrupulous builders), and, since the ships were often put into service before being painted, many American soldiers may have seen the mysterious bright yellow letters. It isn't hard to imagine how that could catch on as a sort of humourous tag.
At some later point, the graffiti and slogan must have merged. It seems likely that the US servicemen grabbed the idea and ran with it (we Yanks have this habit of grabbing up things from other cultures and sort of incorporating them—many of us hope that our foreign friends see it as endearing more than annoying!). During the war, servicemen tagged Kilroy's comical face all around captured fortifications and towns as a way of letting everyone know that the Yanks have arrived.
There are many wacky legends about the significance of this distinctive graffito. One source links it to ancient Irish ownership marks. My own favourite explanation, however, is psychoanalytical take on Kilroy and his peeping visage. Supposedly, you see, Kilroy was (perhaps subconsciously) "Kill Roi" from the English word kill (meaning 'kill') and French roi (meaning 'king'). This goes back to the Oedipal complex, wherein the boy wishes to kill his father and take his place. The big phallic nose on the Kilroy figure just gives further ammunition to this theory. This is probably not the silliest thing the Freudians ever said, but a sounds a bit loony to modern ears.
Sometimes a graffito is just a graffito, after all.
References:
Kilroy Was Here at AllExperts.com http://en.allexperts.com/e/k/ki/kilroy_was_here.htm
The Straight Dope The Origins of Kilroy Was Here http://www.straightdope.com/mailbag/mkilroy.html
Kilroywashere.org http://www.kilroywashere.org/001-Pages/01-0KilroyLegends.html
Digger History online: http://www.diggerhistory.info/pages-help/faq6.htm#foo