Oh yes. It's insulting. You're saying "I am kicking your ass" which means "I am beating you".
Saying "My foot is in..." is a way of saying it I hadn't heard, but I understand the meaning. I also get a sense that this emphasizes the idea that "I am way ahead of you, you are slow in catching up" I juess because it implies that I have already kicked you and you haven't even noticed it yet.
When can you use it? When you are yelling at someone? When you are taunting your opponent in pro wrestling?