Entities, Water, and Lava are rendering but nothing else

The bug I'm having is when I press the 9 key while it has torches in it on my key board while playing minecraft in survival on a 1.7.1 server the screen quickly changes to rendering only entities and liquids. My screen doesn't stutter or freeze the only thing besides the change is if I hold a certain items in my hand like dirt and torches It'll flicker as well (Every thing vanishing then reappearing every half a second or so). The items that make my screen flicker also lose their in hand textures.

What I expected to happen when I push the R key then E or inventory is nothing unless I set it to something in the controls settings

What actually happened was I could only see the entities around me and the water and lava below my feet, as well as the black hit box outline

Steps to Reproduce:
1. Start up minecraft in the new launcher
2. Create a new profile and name it snapshot
3. Make this new profile snapshot 1.7.1
4. Go to an unmodded (completely vanilla) server or SSP
5. Press the 9 key while it has torches in it standing still or moving
6. You should now have an X ray like rendering on your screen

That's as specific as I can get because it's time to log off my computer.