Nothing new here, this means you can build a custom car, and only have to worry about the emissions regulations of what it resembles. It's still registered as the make of whoever built it. It doesn't become a Porsche.
It says model YEAR, not make, model, and year. That means you register a 1953 Beck spider, not a 2011 Beck spyder. I hope that clears that up for you.
Washington just recently adapted kalifornia emissions rules, so this meant your replica/custom had to meet new regulations, but registered as an older year model car, it doesn't have to worry. For example, you can't put an engine that is older than the car in kalifornia. That means you'd have to build your home built car with only a current year model engine. But, if it resembled in some way a 427 cobra, you could use engines from the mid sixties and up.