@trik68 I have been messing around with this the last couple of days and can say it is quite inconsistent but repeatable. I haven't found a way to trigger it every time, but have been able to pull it off after a few minutes of repeat attempts. Given the stuff I need to do in order to try and trigger it, I can see this happening to players accidentally as well as just randomly.
The player in the glitched state cannot see it from what I can tell, and as you said, it varies from player to player when it comes to seeing someone else do it. It also seems to clear up through various actions or through the player going through a loading sequence.
I may not have landed on the exact sequence to trigger it in 1-2 attempts and it may not be consistently visible to all, but I still view it as an exploit since it can be triggered with patience and the players intent once in that state.
I will keep tinkering on :)