First, my apologies for not mentioning the following earlier regarding avodah zarah. The truth is that I can’t believe that it slipped my mind.
Many of us – both chassidim and Litvishe – have pictures hanging in their houses of their rebbe or rosh yeshivah, and this is despite many gedolei Yisroel not being happy with the practice. The purpose of this (aside from showing others where you belong :)) is so that when you look at the picture it will hopefully inspire you to live up to the directives of the person pictured and to increase in Torah and mitzvos. If, however, you were to hang up a picture of your rebbe/RY and have it permanently covered, citing the reason that the picture itself can achieve something, that would be akin to avodah zarah. Does anyone disagree with that?
Yet in Lubavich the minhag is to have a picture of the Lubavicher rebbe hidden in the pillow holding the child at his bris. No one can see the picture at the time. If the minhag would be to show others – or even the rach hanimol, who probably can’t focus yet – the picture so that the image uplifts people, it could be understood. But please explain why hiding the picture where it can’t be seen is not an act of avodah zarah by attributing some form of power to a picture.
In one of the pamphlets put out by the Degel people in 5749, during the bitter election campaign between Degel and Agudah – they cited a story about R Yaakov Landa zt”l, the rov of Bnei Brak, who was a Lubavicher and, I believe, the house rov of the Rashab of Lubavich. According to the pamphlet, he once attended a bris, and when he saw them putting the picture in the pillow he asked what was going on. When he was told he became extremely agitated and said that it was avodah zarah. He could not be calmed down and had to be taken out of the room.
The story may not be true, after all, it was publicized by snags (!) but it certainly may be true.