I haven't watched the demo as I spotted this right before I was going to head off to work, but I thought I'd add a small amount of insight from the perspective of someone who gets lag spikes ( since you said he was having issues with lag before you suspected walls). I personally get 0.5 sec-1sec long lag spikes about once every 30 seconds to 3 minutes (somewhere in there for the amount of time between spikes). The thing about lag spikes is that every now and again I'll get around a corner while spiking then the spike will end and I'll be back behind the corner having seen what was on the other side. (though this isn't that common as anyone who plays with me can vouch for the fact that my lag gets me killed more often than not)
It is because of this that I believe it feasible that he could know where one or two people are around a corner or something (how many of them depends on spike frequency and whether or not the spikes are intentional. if it's a see everyone type of thing or he's tracing through walls then my post is irrelevant but I just thought I'd bring that bit up.