This item drops from in Onyxia's Lair.
As of Patch 3.2, this item will still drop from Onyxia in the level 80 version of the instance (10- or 25-man) if you have the quest. However, this means you must be level 80 to complete the quest chain, as lower levels cannot enter the new level 80 raid.
Draconic for Dummies as a reagent
Patches and hotfixes
Patch 1.9.0 (03-Jan-2006): Added