While I don't think it's all that common, I can say that I've seen the same, or a similar effect in siege a couple of times. I do not know for certain what might cause it. It could be one or more combinations of server, system, or client lag, or connection issue (slower connection for the other player, or for you), or even the speed (or lack of it) that your computer draws the object.
I've also seen it in the regular game world, mainly in Varanas, after I've ported around a bit. It doesn't seem to affect every other toon, but with some I just seem to see the names, but not the toons themselves. Relogging usually fixes it, but that's not necessarily practical during siege.
You might want to send a ticket to Support about this, at least to inform them about the issue, and give as complete a description as you can. If you have screenshots available, please do include them as attachments to your ticket.