Its not teflon, its Delrin.
This is no where near a new idea. Randy Elis used to run a similar setup on his old, old buggy. Only his was MUCH better in the engineering and design portion. There have been a few ideas like this, to try and replace the shackle, and on a pure trail rig they have worked decent, but they required to much maitinence, and couldnt match the simplicity of the shackle.
All this does, is that as the spring compresses or droops, this slides to take up the change in spring length. It works, and it does eliminate side to side movement, but also can limit flex by not allowing the spring to twist.
That guys setup is just plain scary, though. Get that thing in a hard sidhill and i can see it just coming appart. Whats scarier is that it sounds like he drives it on the road too. Good thought, HORID execution.