Yes, this is a reference to the fic you think it is. And yes, that's a honkin' big sledgehammer.
I had this idea bouncing around in my head anyway, and saw a prompt on the Hetalia meme for fics/art involving a character meeting their badfic counterpart, which prompted me to draw. Since the authors of the fic being referenced have openly admitted the characters are OOC, have written parody fic of it themselves, one of them seemed proud when mentioning that it was almost on TVTropes' "So Bad It's Horrible" page, and the results of this meeting would be remarkably similar to the contents of the fic ... if they object I'll take this down, but I'm hoping they see the joke.
Replacement!China is naked, one-eyed, and messed-up-looking because Real!China let Russia at him first. Russia may have been preferable to what Real!China has in mind, but I'll leave that to your imagination. He's sparkling because, as a Villain Stu, he bleeds black glitter.
Also, China is hard to draw.
The Fic Which Must Not Be Named (c) its writers.
Hetalia (c) Hidekaz Himaruya.