“Il est quelle heure ?” is correct when you are speaking. I’ve never seen it in a text (except in written dialogue).
In general, this word order seems to belong to the familiar register, but it’s perfectly okay for more formal situations as well (for example, when a boss asks his/her employees). With the other order of words “Quelle heure est-il ?”, it looks more formal.
Yes there is a difference on the language register “Quelle heure est-il?”(registre courant ou soutenu) is more formal than “il est quelle heure?”(registre familier) but both have the same meaning.
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