Actually, only a little of this is familiar (mostly the framing segments with Will Smith in bed, especially the ending) definitely not what I saw on line. Maybe I only saw an excerpt back in the day. It definitely made it to TV briefly despite the label claims, it was subject to a fair amount of playground talk in 5th grade.
I believed your claims because I saw this video too when I was a kid. I never got to see any clip of it on the internet. What's sad is that I don't remember the video to be like this which means I'm old enough for my memory stretching that far back to be unreliable.
I thought I saw a really low resolution clip of it around maybe 2004 but I think I'm confusing that with tracking down a grainy quicktime file of the original cut of Sex Dwarf, because I remember the background being a lot plainer and whiter.
There are a lot of people online who remember this being in heavy rotation for a week or two before the lawsuit, I wonder if the label is still denying that it ever aired or if they've changed their story now that a copy has emerged (officially every single copy including the master was destroyed per the terms of the settlement).
Mostly I remember talking about it at school, especially in art class.