I do the very friendly enthusiastic smile and wave too. I figure it will:

A) make them extremely frustrated, thinking I didn't 'get' their meaning at all.
B) make them feel a tiny amount of shame for being such an a__h_ole. (hey, it's possible)
C) confuse and puzzle them, perhaps even making them actually 'think' for a moment or two. They might conclude I'm crazy, which is good too.
D) I find it very funny, which instantly makes me feel better.

Most of all though, it reminds me of a memorable incident when i was about 6 yrs old...
In NYC, my mother (who was a very attractive woman, to my frequent childish embarrassment) was walking with me on the street in the city.
A car full of businessmen (out on their 3-martini lunch no doubt) slowed down next to us while we were walking, and a couple of them waved out their open window and yelled "Hi there!" to my mother. This was bad enough, but what followed then was far worse on the small daughter Embarrassment Meter. My mother, being somewhat more naive than I (lol), actually missed the mark entirely and mistakenly thought that these must surely have been friends of hers to greet her this way (), so she responded by boldly walking right up to the car window with me in tow and cheerily saying "Hi!, how are you!?". I barely had time to whisper a horrified "MOMMY!" to her when I saw the fellows faces dramatically transform from expressions of cocky lust to looks of ghastly fear all in the space of a split second. The blood drained from their faces and they hit the gas, hightailing it down the street in shame. I stood there, jaw dropped, having just absorbed a Valuable Life Lesson in dealing with emboldened wise-_sses.
Meanwhile, my mother stood on the curb a bit confused for a second, then shrugged and we continued on our way.
Thus, I get a big kick out of the enthusiastic smile and wave response to jerks.