It's bizarre that it would be illegal. For all I know, it might be illegal in Peru too, but it happens, and it works pretty well.

In Lima, the spotters are known as "dateros" (loosely, "data wrangler"). The bus drivers pay them roughly 20 centavos, I think per stop but I'm not certain.

One case where it doesn't work is when certain bus drivers ignore the system and aggressively jump ahead of other buses. Nevertheless, it's pretty smooth.