I agree that the bold part means "one person," but in the above context it would translate to: a winding, narrow alley where two people could barely squeeze by each other. You have to have two people who すれ違う.
Here is another example of this term:
人一人いない = 人が一人もいない
人一人 is beautifully symmetrical, and almost looks like an emoji.
This construction sounds a little off to me. We usually say「人一人通るのがやっと」(barely wide enough for one person to pass). If it was two people barely squeezing past each other I would say「誰かとすれ違うのがやっと」, 「人一人とすれ違うのがやっと」 or 「人二人がすれ違うのがやっと」.