could it also mean "you know yourselves"?
guessed you know yourself and it was right too!
will "tu tu connais?" also be acceptable in an informal setting
The reflexive pronoun for the second person (informal) is te, not tu.
So it would be tu te connais.
You wouldn't only use this if you were in a formal setting, you would also use it when talking to multiple people.
so "we know each other" would be "nous vous connaisons?"
No, nous nous connaissons. Nous vous connaissons would mean "We know you."
It would be "Nous nous connaissons".
Or possibly "on se connaît" colloquially.