As far as i know its not a hack. I had the same question a few months ago:
http://www.dswp.de/old/lamas-corner/vagelis-gr-what-is-this-t1269.html (in my case as demo instead of screenshot)
I tried to explain it, but it's better to quote SvaRoX:
SvaRoX wrote:
It's the famous spectator bug : when you go spect, you are in free look mode. If you /follow someone without having clicked first (ie specting someone in normal or third person view) you get some bugs : no weapon nor crosshair, and if the player is using tac you get these blue models instead of green screen.
Magao once banned macko because of that

Don't worry it's "legal"

<edit>Stv was faster...</edit>