'Flustrated' looked to me like a potentially useful portmanteau word, and at least Merriam-Webster seems to agree, which would give some legitimacy to 'flustrating'. Whether the person you hear saying the latter had this in mind is, of course, another matter.

To give an idea of how I see it as potentially useful, there are some frustrating events which leave a person in no doubt that there's nothing they can do to remedy the situation (or that they have no choice but to put a lot of work into fixing a situation which never should have arisen), while others might leave a person in a tizzy over what to do now.

There's plenty of times I've deliberately used a made up word that onomatopoetically just fit better. See? It just works.

I absolutely know when I'm doing it, and it's not a confusing/conflating of two words situation. I see it no different than when people say any new phrase like how people just say "bet" in a way that has absolutely nothing to do with the word's definition. At least what I'm doing still uses the meaning of the pormanteau's base words appropriately rather than just using a word randomly because it's hip