Yeah, he did this on the DLR tour when they appeared in England way back when.
The crowd was hushed...
Then the crowd went wild.
I don't believe he was using the sustainer then.
He does two variations, one where he lets the neck follow a 30 degree angle (to the horizontal) and drags the axe across his body with the right hand on the bottom of the guitar whilst playing a descending run with the left.
The other is where he holds the axe at a high fret and lets it fall under its own weight whilst playing another descending run. It's awfully impressive, 'cause it's running the whole length of the fretboard, and that sort of stuff always sounds good (go listen to Eric Johnson!).
I'm assuming he's countering the guitar falling out of control with the friction from his palm on the back of the neck and his right hand controlling the speed at which the guitar drops.
Okay, at the risk of embarrassing myself like I've never been before, I've stuck an image up over at:
**I should warn you all that I cannot draw (yet) so any young children or pets or senior citizens should be made to leave the room for risk of trauma.**
Hopefully the image will explain what I've known Steve to do. Some of you may mean something else. The image on the left is before he starts (holding the guitar at a high fret) and the image on the right is the final position (holding the guitar at a low fret). The arrow shows the path of the guitar (straight down). I haven't shown his right hand holding the bottom of the guitar (near the strap screw)
Yes, I'm serious. The guitar slides down/falls and he legatos his way into the history books. He plays a lot of notes very quickly and it's dazzling to see and hear.
(Any artists wishing to sign me up for collaborative gallery exhibitions should contact me at the usual address.)