Given the focus of Propnomicon you won't be surprised to learn I think this is a gaff. Other skeptics have pointed out that the anatomy of the "fairy" is consistent with a prop built up with bits and pieces of bat specimens. Here are some high resolution screencaps from the video.
For comparison, here's a preserved bat skeleton. The short humerus bone and long, slender radius and ulna are identical to the ones present in the "fairy".
Based on that I think it's pretty obvious the specimen was built up using parts from at least two bats. The protruding snout of the skull was trimmed down, hence the lack of teeth in the "fairy". The original wing membranes were trimmed away from the main body to produce a more humanoid form. The gaff maker then clipped the arms at the hand joint and glued on a foot from another specimen to serve as a hand. The legs are a repurposed set of arms.
The real genius of this piece is how it was glued together. Just look at how perfectly that was done. There are no visible seams, the joins are strong and flexible, and the substance used is impervious to immersion in formaldehyde.
I'm going to let you in on a gaff-maker's secret- meat glue. Or more properly, the enzyme transglutaminase. With it you can stick body parts together like a real-world Dr. Frankenstein. I buy mine right off of Amazon. It was originally used in the food industry to literally weld bits of meat together to form things like chicken nuggets, but it didn't take long for someone to figure out it was ideal for making gaffs. This article from the International Culinary Center goes into detail about how it works.
Transglutaminase (TG or TGase), better known to chefs as “Meat Glue,” has the amazing ability to bond protein-containing foods together. Raw meats bound with TG are often strong enough to be handled as if they were whole uncut muscles. TG is safe, natural, and easy to use. In the kitchen, TG is primarily used to:
• Make uniform portions that cook evenly, look good, and reduce waste
• Bind meat mixtures like sausages without casings
• Make novel meat combinations like lamb and scallops
• Produce special effects like meat noodles, meat and vegetable pastas (using gelatin as a binder), etc. Additionally, TG can thicken egg yolks, strengthen dough mixtures, thicken dairy systems, and increase yield in tofu production, among other useful applications.
In the kitchen bonding two different animals together might be a cooking disaster waiting to happen, but it's exactly how most chimera-style gaffs are made. What makes TG so amazing is that the bond is incredibly strong even for fine, delicate parts- like the bits of bat that were glued together to form the Mexican "fairy".