You sure there wasn't a chance that mods could be effecting it? Because Vercetti's gang was carrying M4's.
Lol at the Cuban at 1:22, all walking like he's blind.
The only Modded thing here is Changed gang weapons, rest everything is un-modded. In order to do this Glitch or whatever below is the complete procedure.
Step 1 Go nearby a gang member and Enter Cheat "HOPINGIRL" (may take a few tries).
Step 2 With the gang member on your bike, go to a gang member which is Hostile towards The gang member sitting at the back of your bike (ex Haitians hate Cuban and Vercetti gang etc).
Step 3 Get Off the bike and allow the enemy gang member to see the gang member on bike, You'll notice that the enemy gang members will rush towards the gang member on bike and they will all sit on the bike and become invisible. Hit replay button to see them all.
Step 4 You can use golf Club or bat and hit the bike's driver seat, they'll all fall down.
Step 5 (optional) You can get on the bike after all the gang members have already sat on the bike and then go to other gang areas and get other gang members to get on the bike too. The more you do it the less ped will spawn on foot.