My wife and I found this while doing a casual 16 star run together. Is this new? Is it possible on Fresh SM64?

As far as I know, that should not be possible in normal SM64. I know of a similar glitch involving stored item information manipulation, but I don't think that's what's going on here (although there is a chance that it is.) I'm gonna assume that this is only possible in the multiplayer version that you are playing. That's a really cool glitch, though.

The multiplayer version is known to be buggy, it's completely different form the base game.

Well even if it would be possible on the vanilla version (which i doubt) this would most likely be slower AND harder to pull off, therefore causing it to be useless for speedrunning. Looks pretty funny, though.