This happened to me on an iPad Mini running iOS 6, and my sister was on an iPad 3 running iOS 6. We were on a local multiplayer world.
After having FINALLY convinced my sister to play Survival with me on Pocket Edition, she started up a world on her game and I logged on.
After fiddling around and also finding the Local Multiplayer Chest Crash I've also posted about, I noticed the block of wood she was holding looked kind of weird.
I looked closer and noticed that the top side of the block and the side of the block closest to me were invisible, so I could more or less see inside of the block. We started holding a few different blocks and noticed that you can see inside of a block or slab that another player is holding. We don't know if it also works with stairs.