It was cute for the guy and the reactions are sweet from Steve but it's a bad thing to rip off another guy's playing as much as that guy did.
He must have been doing this for years without someone telling him it's an unhip thing to do. It's nice that he's a fan and has chops but beyond that the video makes me cringe a little.
That's a big difference between the jazz and fusion guys and the rock guys; if a copycat did that sort of thing in front of a Holdsworth, Scott Henderson or Pat Metheny it would be a lot more obviously embarrassing for everyone concerned and with good reason.
So what you're saying is that the rock guys have a sense of humour and that the jazz and fusion guys don't?
It's obvious that the guy is a big Vai fan, but who is to say that Vai is the only player he could ape like that, he might be able to do Satriani, Gilbert, Bettencourt and all of his other heroes too.
With that level of technique he probably can switch off 'the Vai' and be himself as well. The point there was to put on a great show, and have some real fun. Everyone on stage was having fun, the audience was having fun, and everyone else in this thread is having fun...