I think the theory is some hopeful pseudoscience. Preparation H has some vasoconstrictive properties, but it is intended for application to rectal tissue, which is very different from penile skin. Rectal tissue absorbs fluids readily, so the vasoconstrictor can work on the blood vessel that is immediately under the tissue. For the intended effect on a penis, it would have to be absorbed by skin, which is far les absorbent, and then get past the tunica and into the blood vessels in the corpus cavernous.
Not gonna happen, but let's assume it does...all that it can then do is prevent or minimize an erection. A huge flaccid penis is not necessarily partially erect all the time.
Perhaps ironically, IF the skin could absorb it, the blood vessels immediately below the skin are mostly "return" veins that if constricted would maintain any partial or full erection!