The question seems very simple but a proper response would involve several answers.

I will give my solutions point by point, using jQuery.

Autocomplete

This is the simple part. You can use a plugin like select2 or jqueryui autocomplete and a view that finds users like

def search_users(request):
    search = request.GET.get('term')
    users = User.objects.filter(
      Q(first_name__icontains=search)
    | Q(last_name__icontains=search)
    )
    ulist = list({'id': u.id, 'value': u'%s %s' % (u.first_name, u.last_name)}
        for u in users)
    return JsonResponse(ulist)

This view is compatible with the default jQuery UI Autocomplete plugin

Dynamic Formset

This is the tricky one. The key is to take advantage of management_form and form.DELETE. Here is my solution:

• Use an inline formset for the participants (with one extra form)
• Print the management_form
• Add form lines with jQuery after autocomplete selection by cloning a hidden empty form (the extra one) and incrementing id_form-TOTAL_FORMS
• Delete form lines with jQuery by hiding them and checking a hidden delete checkbox

Template

<form method="post">{% csrf_token %}
{{ sessionform }}
<div>
{{ participant_formset.management_form }}
  <label for="part_search">Search: </label><input id="part_search" />
    <ul id="participation_set">
{% for tform in participant_formset %}
    {{ tform.id }}
      <li>
        <span class="participant">
          {{ tform.participant }}{{ tform.instance.participant.name }}
        </span>
        <span class="status">{{ tform.status }}</span>
        <span class="delete ui-icon ui-icon-circle-minus">
          {{ tform.DELETE }}
        </span>
      </li>
{% endfor %}
    </ul>
</div>
</form>

CSS

/* Delete button */
#participation_set .delete {
  display: inline-block;
  vertical-align: middle;
  cursor: pointer;
}

/* Hidden delete checkbox */
#participation_set .delete input {
  display: none;
}

/* Deleted form */
#participation_set li.deleted {
  display: none;
}

/* Last hidden form to clone */
#participation_set li:last-child {
  display: none;
}

jQuery

/*! This adds a form line
 * Call it on autocomplete select
 */
function add_aform(inst, item) {
  if ($(':input[name$="participant"][value=' + item.id + ']').length) {
    return false;
  }
  var total = $('#id_' + inst + '-TOTAL_FORMS').val();
  var sul = '#' + inst;
  var li = $(sul + ' li:last-child');
  var new_li = li.clone().appendTo(sul);
  li.find('span.participant').append(item.label);
  li.find(':input[name$="participant"]').val(item.id);
  new_li.find(':input').each(function () {
    var new_name = $(this).attr('name')
      .replace('-' + (total - 1) + '-', '-' + total + '-');
    $(this).attr('name', new_name);
  });
  new_li.find('label').each(function () {
    var tmp = $(this).attr('for')
      .replace('-' + (total - 1) + '-', '-' + total + '-');
    $(this).attr('for', new_for);
  });
  new_li.find('.delete').click(del_aform);
  $('#id_' + inst + '-TOTAL_FORMS').val(++total);
}

/*! This removes a form line
 * Call it on click from delete buttons (placed inside each li)
 */
function del_aform() {
  $(this).parents('li').addClass('deleted');
  $(this).find(':checkbox').attr('checked', true);
}

I know I could also use an empty_form instance and use __prefix__ to replace the ids which simplifies the javascript for a better maintainability, but I didn't find a way to factorize the code between the true form and the empty one.

View

The view is pretty standard using inlineformset_factory with extra set to 1 (to get the only hidden form to clone). Also don't forget to use a HiddenInput widget for the field participant