I did some asking around about this and I think it's version two. I'll check it out tonight when I get home.
Basically, you do the first part of Sub-Zero's finisher over and over. Each time you do, it "restarts" the fatality timer, which allows you if you're Shang-Tsung to morph into someone else.
It's pretty cool. I remember showing this to someone the first time and mad them furious because you can indefinately keep the person stuck in the "freeze" part of the fatality. What a way to rub it in...
p.s. I'm a bad winner.
