Yes. It was a thing people did for a while to attempt to bootstrap PGP/GPG's web of trust, as you say, but also as a PR sort of thing. Crypto was even more black-arts then than now, and with some of the demonization due to the war with the Clinton administration over ITAR, you heard some of the same stuff you hear now about having something to hide, enabling terrorism, etc. (At the time, the "Four Horsemen of the Infopocalypse" - drug dealers, pornographers, terrorists and kidnappers - were the boogie men; it seems kidnapping is less scary these days, so that one gets left out.) Showing how it worked was good PR, as far as it went; I saw a lot of people get that little kid with a decoder ring look.

It was mostly a cypherpunks thing, but I understand others sympathetic to the idea picked it up. There were quite a few in the Bay Area, ca. 1993-97-ish. Perhaps later.

I recall one entertaining party where proof of identity via government issued paper was forbidden.