Segun pone ya en wowhead.com (http://www.wowhead.com/?item=50380#dropped-by):
The quest starting item has a chance of dropping from any of the 3 ICC Heroic (and ONLY Heroic) dungeon wings.
Update: As of 12/10/09, the drop rate of the Battered Hilt was lowered in the ICC 5 man Heroics. (...) It is now an very rare drop from the ICC Heroics
According to the Armory, it has an equal drop chance off of all mobs in the Heroic version of any of the three 5-man dungeons in Icecrown Citadel: The Forge of Souls, Pit of Saron, or Halls of Reflection.
Por lo que solo en hero, y con un drop mas reducido, segun un fix que metieron ayer (en el que se supone arreglaban otros tantos bugs, junto a un "nerf" a HfB para balancear al rogue assasination pve). Fuente: http://blue.mmo-champion.com/23/21723843880-recent-ingame-fixes--decmeber-2009--129.html
Parece que el drop se queda en un 3-4%, bajando de los cerca de 17% que tenia antes :/