Yes, that is an adult film actor dressed up as Spongebob Squarepants. Yes, it looks as if he is about to have sexual congress with an actress dressed to look like Sandy Cheeks.
No, there are not any scenes between Spongebob and Patrick, nor are there any 5-way gay C.J.'s with Squidward and Mr. Crabs.
As you may note from the picture at left, pornographers are putting some pretty high production values into these parodies nowadays. If you look closely, Spongeknob (nee,Spongebob) seems to have oozing pustules covering his upper torso. Also, the actress playing Sandy does a really, really good impersonation.
To see the SFW trailer, click ahead to the next page...