So I was playing with a friend and i had taken an Invisibility potion and put a pumpkin on my head i then saw that it was acting like his head but staying when my head should have been so that when he stood inside my player my pumpkin copied his head, it stopped as soon as the potion wore offa nd did not occur with helmets. My friend could not see it so i would say it is client side only.
This happened on a Survival Multiplayer Server The server had bukkit and a small collection of mods:WorldBorder, WorldEdit, Bukkit Compat, Parties, Lockette, Vault, PermissionsEX, ModifyWorld, Quester, VoxelPort, WOrldGuard, Essentials, Chatmanager and EssentialsSpawn. I don't believe these mods could have had this effect but have not tested it on a vanilla server.
Same issue as MC-56 ? Try version 1.4.3