Not military stupidity. It may not be necessary, but SF guys train with shooting past one another, so the fact that somebody stands absolutely still an let's trained folks shoot by isn't too terrible at all. I would not do it voluntarily, but if there is an issue of stupidity, it is of the guy letting themselves be shot by.
Agreed, highly trained assaulters shoot within inches of each other all the time during training. It all comes down to the environment and the people you are with, and the purpose of the training exercise.
That said the video was ridiculous and pointless.