Chameleon does not work if you have flashing red enmity. You have to use it before you reach that level now. Kaeko Leta of Figaro server and some of his friends did extensive tests on the new enmity system. You can find all of the results in three places; His lodestone blog, his livejournal, and his BG threads. He links to all of them in his lodestone blogs, so that's a good place to start.

Below is the URL to his lodestone page:
http://lodestone.finalfantasyxiv.com...cicuid=1882333

Edit: Just to clarify, since I foresee some people misunderstanding... It works if your enmity is red, but if it's flashing it has 0 effect. Any hate loss you notice at that point is from a tank, healer, or another DPS taking it.