Yes, sir, it is indeed possible for Brazilian seahorses (Hippocampus reidi) and Mustangs or Sunbursts (Hippocampus erectus) to cross breed successfully. The ranges of these two species overlap in the wild and they are known to occasionally interbreed in nature.
Furthermore, the offspring produced as a result of a H. reidi/H. erectus pairing are viable and develop normally. In fact, I can tell you from personal experience that the offspring from such a cross are often very beautiful seahorses that combine the best features of both of their parents.
Interspecific hybridization has also been known to occur between a number of other species in the aquarium, David. For example, Hippocampus barbouri and H. comes are compatible in all their aquarium requirements and have also been known to crossbreed. And, like the H. reidi/H. erectus crosses, the interspecific hybrids that result from H. barbouri/H. comes pairings are often very striking. For example, I know of one case where a female H. barbouri mated with a male H. comes in a hobbyist’s tank (Greg Hiller, pers. com.) and produced offspring. Hiller succeeded in raising one of these hybrid fry well into the juvenile or subadult phase, and it was a very beautiful specimen indeed. The hybrid barbouri-comes youngster showed the pale color, crownlike coronet, increased spininess and boldly striped snout of its H. barbouri mother, while retaining the splendid mottling and tiger stripes on its tail and body that it inherited from its H. comes father. Outstanding!
So it’s most definitely not unheard of for certain species to crossbreed and produce viable offspring in captivity, and that’s not necessarily a bad thing on the hobbyist level, since the hybrids that result can be very attractive seahorses. However, that doesn’t apply to a commercial aquaculture facility, David.
Crossbreeding is generally frowned upon and considered undesirable in aquaculture for a number of reasons, most all of which do not pertain to the home hobbyist.
In home hobby tanks, however, where different species of seahorses are often mixed freely, crossbreeding or interspecific hybridization does occasionally occur, but it is quite uncommon, especially when seahorses have potential partners of their own species available to them. The prolonged, elaborate courtship ritual that seahorses go through before mating occurs generally prevents seahorses from different species from breeding successfully. Suffice it to say that seahorses are much, much better at species recognition than we are, and that given a choice, they almost always prefer to mate with their own kind. Almost always.
So, sir, all things considered, my advice to you would be to just sit back and enjoy the show. If your reidi stallion ultimately ends up pairing with the female Mustang, rather than the Mustang stallion, it’s not a tragedy at all and may produce some very interesting results.
Best wishes with all your fishes, Dave! Here’s hoping that, one way or the other, you soon have a brood of healthy babies on your hands, sir.