Well I got a reply from the youtuber, but he really doesn't want to give out his secret. Which I understand.
However, this is what he did say.
"The effect was not done in XLights. I wrote my own post processing and effect system that overwrites frames in the FSEQ output. It?s one of the reasons why our shows look slightly different, that effect being one of the biggest differences.
The show is old at this point. At the time, XLights did not support GPU shaders, but I hear that it does now support OpenGL 3 GLSL shader model. I used my own image processing library and Vulkan shader model, but you could accomplish the same thing with OpenGL. I don?t know how XLights integrates with the effects and what not, but that?s probably the best way to try to pull off the effect."
Unfortunately, I don't understand what he said, so I am still at a loss. Still trying to figure it out.