Heh - the video refers to Sonic's quills as his hair. Also, could that flapping-Eggmobile concept art be a scrapped Special Stage idea? It would certainly fit with the 3D perspective angle they were going with. Speaking of special stages, was that "Sonic circling the Earth" thing just a weird mockup for the video - as if it's saying "Sonic's popular all around the world"? Or does it have a connection to the Blue Spheres special stage, given that it was based on Kaio-sama's planet in DBZ?
To be fair, I searched 'Blue Sphere dragon ball z' and checked the wiki, and got nothing. I didn't really go further than that out of laziness.
It would make sense for it to be an early idea for Sonic 2's Special Stage. It looks like Sonic's in some kind of vehicle, so there's also the possibility that it was for another children's arcade ride? That bird though - same artist?
Certainly looks like the same artist, going by the bird! Also, if it was a scrapped Sonic 2 Special Stage, it could have been re-jigged as Sky Chase Zone's plane sections which are a bit of an anomaly within the core gameplay.
I have an upload of the tape (not my recording, but yeah) on my channel with subs if you're interested.