It works with old model crabs too. Because of the way they hold their claws the knife has to be held sideways:
The device is called a Crab Shank, and is dropped by a nasty crab called Pinchshank, located in Suramar City, on the east side of the harbour. The Wowhead page for the crab isn't active just yet, so the link won't work.
It's a permanent device, with a 5 min CD. The appearance buff on the pet lasts an hour, so effectively as much as you like. So awesome

I tested on one crab battle pet so far: the Shore Crawler, but it didn't work. I would half expect them to enable this for minipets though, so I'll keep an eye on it.