Yes, that was one of the original rides in Fantasyland, 20,000 Leagues Under the Sea. I rode it as a child and it really wasn't my cup of tea. The last time I rode it was in 1993, right before they closed it.
It was an extremely slow loading ride and the lines would be outrageous--- so there was always a huge line soon after opening, even at slow times. Also it has been said that there was no way to adapt it to fit the Americans With Disabilities Act, which would allow handicapped access.
It is a shame that they have never done more with that area than have it as a character greeting spot. The waterway is connected to other waterways in the MK, so for that reason, the water must remain. I hope that one day they will find an attraction that would adapt nicely to the waterway, as well as meet the criteria required to make it handicap accessible