It's honestly amazing it's gone on this long and improved over time. I've seen many crash and burn after much shorter time frames. Hopefully Dan Shive can continue it far into the future!
It certainly sounds extremely similar to quantum superposition that only solidifies when directly observed. But then, neither I, nor Dan, nor most readers I'd assume, are quantum physicists, so make of that what you will.
Another possibility is this. Magic has a mind. Is it possible other things have minds? Is it possible that inanimate objects have minds? Or perhaps there is a single mind that either is fooled by the projection, or perhaps is kind enough to respect the projection. Kind of like letting people pick their own pronouns.
Ever heard of "constitutive panpsychism"? Basically, the idea is that consciousness doesn't merely "arise" from certain configurations of matter (brains), but rather is an inherent property of matter. Every particle has a teeny tiny rudimentary form of consciousness. Perhaps this is the "mind" being "fooled" by the projection when her "real" body passes through inanimate matter.