The effect hinges on the way that the 3d object is modeled. When you load the file using the "objects" output port on the kineme3D loader, you will see that there is a large structure table. As the iterator ramps up the amount of iterations, it is progressively loading each piece of the structure.
I hadn't looked at it in a long time, but a little earlier tonight I had this message pop up on Vimeo, where I posted the clip... posted a courteous response (http://vimeo.com/3324281). I knew it would be all the rage in the designer handbag circles: