Apologies for using phone camera, did not have a VCR or an NES-101 capture card handy.
What's happening is that the palette changing that's used for the explosion, should you fail to beat the rat to the bomb (a 100% real possibility, it IS still Rat Race), crapped out and resulted in the mess you see at the start, with all the sprites turning completely black, and all the black portions of the level turning white. Doing this again will result in the entire level turning white.
I did a few runs with this on. I think it IS still possible to complete the level, but since most of the gaps aren't visible, you really have to know the level by heart in order to do it. I haven't been able to do it myself, but I'm sure if this ever happens to you, you might be able to do it.
That being said, I honestly don't know if this is consistent or random. I've been trying to track down how this happens, and so far the only constant I've found are that you have to be playing as Zitz (the P2 character) to pull this off. I *think* it's because there's too many colors and animated tiles on screen at once, but I'm not completely sure of that. I've also tried looking up more info about the glitch, but outside of the videos I've posted, there's NOTHING. No videos, no documentation, nothing. I'm still looking, but I have a sneaking suspicion I accidentally found a new-ish glitch that no one knew about. If you know the game by heart, and know why this is happening, please let me know in the comments.