Is it fairly common. Sure. But at research universities, professors have wide latitude in how they run their research groups. Some are very hands-on, others only intervene as necessary, and everything in between.
Again, this is going to depend on the professor. Any of them would be willing to write a letter, but how good that letter is will depend on how close they keep tabs on the lab from afar. For example, they could be getting updates from their graduate students that include the progress of the undergrads, in which case they could still write a strong reference letter.
Generally speaking, this will cause the PI’s ears to perk up pretty quickly. We are always on the lookout for quality PhD students, as they are what really make our labs function.