When price drops from 100 to 90, there may be a few people that have stops at 89.90. Someone with firepower could go short at 90 (which is not so risky if you know the order book), go down the 10 ct, trigger the stops and cover your short when you see the orders are getting filled.
I read about much more sophisticated variants out there, e.g., the market maker selling order book information for high prices or selling high-speed access to this information but I'd have to search for it.
In 2015, at most exchanges dealing in US equities, the "market maker" is reading the same tape as everyone else hooked up to the exchange. Your scenario is literally selling access to the outdated output of an API to which non-outdated output is available for the usual subscription fee. This sounds far-fetched. I also think anyone who believes this scenario to be plausible has an idea of what "order book information" contains which is likely not an accurate representation of what they actually expose over the wire. (It's like folks who think Facebook sells customer data to advertisers. Seriously -- where's the API you can hit that does that? That needs to be a thing that exists in the world for this claim to be true.)
Using this information is generally possible for any intermediary (bank, broker, ..)
To be clear, I am not saying everybody does it but I think that they can, they want to and regulatory oversight in the past could not even keep track of the total stock of a broker (see MF Global).
I don't understand your trade at all. Could you explain it precisely with the orders someone would put in to take advantage of that trade?
Basically, you don't know the stops are there; you make an educated guess.