It is possible - and in all honesty that is all I know. There used to be a company, or individual under the name of LGP who supplied, I think, film of this type.
Designing such a machine would not be difficult, although you would need a good toolmaking shop to make one. Simply the film would run over a 16mm sprocket wheel that would act as the female to a male punching wheel.
A more interesting concept is the production of super 8 from 35mm film, as three strips 8mm wide should be possible. I think this is how the US firm Pro8? do it, but am not sure.
Whatever method is used the equipment is not going to be cheap as it will all be custiom made.
Possibly a good project for the engineering department of a college that also has a film department.
New web site and this is cine page http://www.picsntech.co.uk/cine.html
several years back on the web I came across a device which looked a bit like one of those old desktop mounted pencil sharpeners which resembled an old Eumig C16. Bulk 16mm film was fed in from the front via handcrank and punched as double 8mm on to a 25ft spool held inside. I have since lost the info on this but i think it may have been a Russian site. Does anyone remember this or a similar device?
If it was a commercial, rather than one off product then it would have originated in Eastern Europe. My thoughts were of a more industrial type machine, but what you have described makes sense. It is the sort of thing they would have used behind the old iron curtain.
thanks for the hint. Might try and follow it up.
New web site and this is cine page http://www.picsntech.co.uk/cine.html