The illusion was discovered accidentally by Sean C Murphy, along with colleagues Jason M Tangen and Matthew B Thompson.
According to the abstract:
We describe a novel face distortion effect resulting from the fast-paced presentation of eye-aligned faces. When cycling through the faces on a computer screen, each face seems to become a caricature of itself and some faces appear highly deformed, even grotesque. The degree of distortion is greatest for faces that deviate from the others in the set on a particular dimension (eg if a person has a large forehead, it looks particularly large). This new method of image presentation, based on alignment and speed, could provide a useful tool for investigating contrastive distortion effects and face adaptation.
Follow the instructions accompanying the video and see for yourself.