What is this item?

[shishaw]

I've seen Horde and Alliance players use this item when targeting friendly and hostile players and NPCs. It rapidly shoots fiery projectiles and smoke at the target, engulfing it in a fireball. There is no castbar, buff, debuff, or damage associated with it.

[Otsegolectric]

interested, too

[Traxex84]

Lunar festival fire works.

[shishaw]

Lunar festival fire works.

Thanks for the tip. Lots of Google searching led me to the item Elune's Candle and this comment:

"It only works on NPCs, but it's currently bugged so that if you are out of line of sight (having your back turned towards the target doesn't count) it won't activate the cooldown or use a charge, but still fire.
This means that by adding it to a hotkey you can shoot it as fast as you can hit the key. For example you can target the NPC in the AH, go outside the building, and shoot at them. For the people inside the AH it'll look like the auctioneer is blowing up in a flurry of fireworks.
Very cool toy."

So I think this is the answer, but I can't confirm.