Per the wording "reveal" and "add" before "discard" I think this interaction is legit?
Card effects cannot cause cards to leave your discard pile, and cards in your discard pile cannot be played.
Shootout Technique: This dude gets +1 Kung Fu and joins your posse. If this dude has a Kung Fu rating greater than or equal to the bullet rating of an opposing dude, reveal the top 5 cards of your deck and you may add a non-Tao Technique to your hand from those cards. Discard all other revealed cards.