I've definitely never heard of this ruling and as such have been playing it how made sense to me, which is apparently now the new rule.
I may be a little confused on this but is it saying that before this rule change that we could've been about to say...rack and ruin a mox and an inkwell leviathan? Not that this situation would come up anymore.
No. It wouldn't have affected inkwell. Inkwell has shroud and could never be targeted in the first place. I believe this is referring to a scenario where the creature becomes illegal after its already targeted, say morphling's shroud ability.
Also it wouldn't have worked with rack and ruin. Rack and ruin
requires two targets, whereas both frost breath and the new card, sudden storm, can have "up to two targets".