Turns out that this was really done... cost about $10K, but it's real.
Also, I know the equipment necessary to produce this kind of lighting effect and it's totally possible... but it takes hours to sync all the lights together to a particular tune.
Plus, the video wasn't faked. The 'shadows' that are jumping around aren't shadow's of people. They are artifacts created by the video compression. Basically video frames are interpolated between eachother (not like in computer animation) and every second you get a keyframe and the process starts all over again. That's where the 'jerky shadows' come from.