Unreliable. As I already mentioned in this thread, a 100 degree F body doesn't emit much IR, especially compared to the things around it that are only a bit cooler. You won't be able to pick that up at all during the day, and I'm guessing that if your headlights illuminated the deer that the IR reflected just from that would wash out anything that the deer itself emits.

However, the car could presumably identify the deer visually (reflected IR, visual light, UV, microwave, whatever works) and figure out where it is and if it is in a position where it could run out into traffic, slow down to a speed that it would be able to avoid the deer if it did this. Ultimately, I'd expect the system to treat non-computer controlled cars, pedestrians and bicycles in the same way, though it may assume that other road users know the rules (stop at red lights, don't jump out into traffic, etc.) and deer don't.
Good picture, however.

And yes, if all vehicles are computer controlled, there'd be no need for signal lights. Or even roundabouts -- if the cars could communicate with each other, they could work out the optimal pattern between themselves -- perhaps acting like there was a signal there, or perhaps even going through at nearly full speed but timing it so they miss the other cars by a few feet.