Like the looking-glass symbol in Chapter 1, Hawthorne uses the daguerreotype (an old kind of photograph) to pierce through outward appearances to the inner soul of his characters. Mr. Holgrave claims that the daguerreotype uses sunlight, "[to bring] out the secret character with a truth that no painter would ever venture upon" (6.16). The daguerreotype can show us truth behind a mask, claims Mr. Holgrave. And the truth lying behind Judge Pyncheon's kindly smile is that, at heart, he is just like cold, cruel Colonel Pyncheon. In fact, Phoebe at first mistakes the man in Mr. Holgrave's daguerreotype for Colonel Pyncheon.
Like Mr. Holgrave's hypnotism, the daguerreotype is another kind of new technology (at the time) that Hawthorne felt would increase our understanding of the mystical and spiritual worlds. Hawthorne's blend of historical fact and fiction at the level of the novel as a whole appears totally consistent with this particular instance of combining technology (the daguerreotype) with fantasy (it can see into your soul!). He just loves mixing metaphors, this guy.