This is an Icelandic stop-motion short from 2002, directed by Hlynur Magnússon. It has no IMDB entry. Running time is 5 minutes.
Plot synopsis from the back of the VHS box, roughly translated to English:
“The film takes place in the near future and tells of a bizarre work of art that has been set up in an old church. People from all classes come together from allover to see this strange creation and their interest has reached levels of religiosity. But what lurks behind all this?”