What's the science here?
The individual bubbles that make up a head of foam are basically pockets of CO2 trapped by proteins and carbohydrates. A touch of oil breaks up the proteins and carbohydrates, popping the bubbles and collapsing the mustache-inducing layer of foam.
Why the nose?
No matter your level of hygiene, certain areas of the body just produce excessive oils. The nose happens to be one of them, and thanks to its easily accessible placement in the middle of your very good-looking face, it's the first place people reach when performing this maneuver.
Do people actually do it?
Serious bars know how much head to put on a pint and most beer connoisseurs appreciate the look and mouthfeel of a thin layer of foam, so you'll really only encounter excessive foam from amateur pours. Pat said he hasn't seen this move out in the wild since his days of college keggers, which were presumably ages ago in his evolution of beer nerdery. It's obviously a gross move to stick greasy fingers in your beer, so expect a strange look, but at least now you can back it up with some science.