Here is a bit more information on how the biology would work in using such a detection system.  Just a note, this is assuming that most alien life forms would have similar physical properties to those on planet earth.  That being said, this system still seems reasonable, even if it only could notice a portion of organisms!

If biopigments were present as a sign of life on a planet, they would leave behind a detectable polarized signature in the reflected light. The scientists have now published their findings in the International Journal of Astrobiology.

Photosynthetic pigments are plant substances that absorb and reflect particular wavelengths of visible light, making them appear in color in the reflected wave ranges. Biopigments are what gives plants, algae, bacteria, and human skin and eyes their colorful appearance. Chlorophyll pigments in plant leaves, for instance, absorb blue to red light but reflect a small part of green in the visible spectrum and thus appear green.

It is this type of outside the box thinking that will propel science and astronomy forward.

thanks to uni-freiberg.de for the great info