But then you cannot prove anymore that you know where Waldo is, no?
Previously, the proof relied on the alignment between the picture and mask being constant, but this is no longer the case. Now wherever Waldo actually is, every mask fits since you can just freely move around the picture.
To align the cutout with Waldo, you need to know where he is. Since the entire picture would be hidden behind the mask, the other person won't know where in the picture that location is, but by aligning the mask cutout you can prove _your_ knowledge about Waldo's location.
Previously, the proof relied on the alignment between the picture and mask being constant, but this is no longer the case. Now wherever Waldo actually is, every mask fits since you can just freely move around the picture.