You mean a system that "duplicates" sand? If so I high doubt this is okay; please screen shot it and post it here
uhhh well i belive a sand dupe would be alowwed because i mean cobble and sand are alike and YOU MAKE A COBBLE DUPER/GENRATOR IN THE BEGGING! so i think sand dupers would be aloud
I dont think using pistons to duplicate any item is allowed (Cobblestone generators dont use pistons)
Of all the duplication devices i have seen, for sand: all of them use sticky pistons and i don't think that's gonna happen ANYTIME soon.
Anyways, duplication devices LOOK like they work (I tried it with a gold block ) and then you mine the block and they turn back to the cobble / dirt you used... For me at least
The thing you saw on my island was just a building with a stack of sand on it (I was bored) that's all.