So I don't have much info on this nor is anyone (including Kaiden) entirely sure if it's a bug or was just sneakily implemented without our knowledge lol. What I can say is that it's happening to everyone. When you get near another player all of their cosmetic items disappear. Here's a demo showcasing the issue: https://drive.google.com/open?id=0B2DyMh0CVkOjRDMtc2s5S1JEM0k
The rendering code was re-written and rolled out yesterday (Which, I hope, provides a noticeable frame increase) but new vis culling code seems to be getting a bit overzealous.
I figured that was the reason. It certainly makes sense. It's just a bit odd and none of us were expecting it lol.