A switchmode mains supply with one transistor.... guess how well it performs...?
Apart from only being able to produce a fraction of the required power and shoddy construction I don't think there's anything wrong with using a cheap unregulated blocking oscillator fly-back converter as an SMPS. This is obviously the wrong application for it, a stable 5V supply is required for USB devices.
Did you actually count the number of turns on different windings?
You also mention about the temperature rise of the transistor and the power consumption. If the SMPS really used as much power as your meter says, the transistor would've melted long ago. I think it's just measuring the apparent power.
I thing the design is worth copying and would be a good way to power LEDs from the mains. Obviously the issue of isolation needs to be addressed, unless the LEDs are going to be in a fully insulated enclosure.
As others have mentioned another possible application is battery charging where there's another regulator. I've seen an unregulated mobile phone charger SMPs before which does have proper isolation between the mains and DC power out.
I've toyed with the idea of building a similar PSU but I wouldn't know what kind of tape to use for separating the primary and secondary. Is there a standard for this? I've dismantled apparently well-made SMPSes before and noticed they all seem to use a similar kind of yellow sticky tape between the primary and secondary.