I think I have an answer, even if it hurts to say it. This can very well be a new, previously undocumented type of broken light pillar phenomenon that appears in the relatively strange weather conditions that exist in and around the Niagara Falls. There are two huge waterfalls here and 2 huge lakes. The reason it looked and appeared so "alien" is that they usually do that anyway (see pictures below) and that there are very bright searchlights in downtown Niagara Falls that interfere with the phenomenon in a way never before documented.
Read more on his blog — Hunting for Truth.
