Sadly it is true. The ride was closed due to complaints that it was too intense. It is being replaced with "Stitch's Great Escape". I have high hopes that it will be a good replacement (but ultimatly I feel it will only be a cutsie resemblance of the former ride). I have read that the new ride is a total replacement for the "Ailen Encounter" attraction and it should open permanently in late October early November.
My wife and I loveed the AE attraction It was new when we went to WDW for our honeymoon in 96 so it will always hold a special place in our heart.
Here is to hopeing the new ride is a decent replacement.