Don't know where it's from, just noticed it on youtube the other day. There did seem to be some kind of audience, though...
It's from Starcon Denver '91, when De was a guest. Part of the festivities on Saturday night is a play parody, originally a parody of whatever big SF movie or event took place since the last con. Eventually, they abandoned the specific play format and started going with a SNL sketch show format, and this is from one of the early ones ("...with musical guest, William Shatner!"). And yeah, the crowd, around a couple thousand, loved it.
I would have loved to see it in person. I wish I could have met DeForest. I remember there was a convention around here back in 1994 or 95, and I believe DeForest was a guest. I was too young to go myself, and no one wanted to take me. J.
J, at least you live near where conventions are! I've NEVER been in position to go see a Trek convention!