If I showed up to a job interview where someone wanted a "white, heterosexual, protestant men with libertarian leanings, no history of depression, unlikely to use alcohol in their free time, who don't look pornography, and are predisposed towards compliance with authority", it would be a strong disappointment for both of us. The problem is not targeted ads. The problem is that people suck.
But say that I am only slightly racist. If I knew you were Black, I probably would not go out of my way to say high to you. But once we are having a conversation it's easy for me to relate to you and my prejudices are more likely to be overridden.
It's easier to fix people sucking if said suckage is easily observable though...
What I'm mostly saying is that a lot of the you-are-the-product hate is often presented hand-in-hand with “facebook just gives your information away to advertisers willy nilly so they can make money”, and I'm saying that's not really accurate. Facebook need you to stay on their site, so they get you to share information because that brings you and others onto the site. For advertising purposes, though, they don't have to give away any information, really. And at that point it becomes a matter of “do I trust Facebook with my information”, rather than trusting anyone advertising on facebook with it. This is a smaller question, so it is fundamentally easier to answer.
Now, the fb API of course expands the question to “do I trust facebook… Or any site I visit that uses the facebook API”. But still, there is a “me” component there—I have to visit those sites. This is still a potential problem, no question, but it is not the oft-presented specter of facebook sharing your private information with an arbitrary third party for the sole purpose of presenting advertisements on the site. That's the refrain I hear a lot that I wanted to say something about.
And who don't look at pornography?
Say I want to show an "ad" to white, heterosexual, protestant men with libertarian leanings, no history of depression, unlikely to use alcohol in their free time, who don't look pornography, and are predisposed towards compliance with authority currently employed in the technology industry earning over $150,000. Say my "ad" is for a high-paying job opportunity. Or housing. Facebook definitely has the ability to let me do this.
I find that unsettling, in that people can use Facebook to apply prejudices against information I'd prefer to keep hidden but that Facebook has inferred via data-mining even without knowing who I am or actually learning that information about me.
The "stalker" scenario presented here is certainly frightening (although as a heterosexual man I can only really understand the fear in the abstract), but the "reveals information I'd prefer to keep hidden to people with a financial motive for knowing it" scenario is already getting uncomfortable.