The creator of this jet-engine powered bug obviously has too much time on his hands...
Yes, it's a jet engine, and yes it's (partially) functional. Note that the intake is in the passenger compartment. So obviously it can't be throttled up beyond it's simple purpose as an over-built flame thrower.
And, yes, of course it is located in California. I'm sure I didn't need to say that.
Site: http://www.ecm-co.com/jetbeetle/
There's also video (on proprietary Quicktime): http://www.sfgate.com/cgi-bin/object/article?f=/c/a/2006/04/30/MNGJGII7BB1.DTL
Summary: interesting, creative, show-off. And after all that is said, it's still a lowly bug.