This revelation happened in their recent Cataclysm Classic blog, where they dedicated a whole header to discussing the removal of the achievement with the Cataclysm launch. Note that this leaves only two faires remaining to finish your Darkmoon Faire reputation.
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Insane in the Membrane Going Away with Cataclysm Launch
In contrast to modern WoW, Blizzard has decided to remove the ability to earn Insane in the Membrane in Cataclysm Classic.