The same software they use for any other run, I'd assume. I've never made one myself, but I think the principles are the same no matter what genre you're running.
Here's another SM64 hack speedrun:
The one I really want to see done is SM74 Extreme Edition, but truth be told, a few of those stars would probably be boring to watch. There are enough amazing ones that it would probably still be worth it, though. Here's a couple levels from SM74EE:
Also, Ombru-Sphere is an upside-down version of Luminum-Sphere and Veneno-Sphere and Crudelo-Sphere are the same level turned on its side in two different ways. There are a few small differences to make them playable, but still, mind blown. That is flat-out some of the best level design I think I've ever seen.