I had a PC with this, and the general feeling is that it was too powerful, especially at lower levels (where the extra attack _really_ helps.) The shorter duration can hurt badly, but generally doesn't. Above 6th level it is somewhat less powerful as you are hurting your other attacks too. *
I'd certainly not allow the extra attack with anything other than a full attack option. That would be way too much.
My house rule, if I allowed this at all, would be that all attacks in the full-round action must go against different targets. That would work out quite nicely and fit my idea of what the frenzy is. And with cleave could be pretty scary really (I'd let cleave attacks be unrestricted probably).
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*Say you need an 11 to hit normally (including raging) and you have a +6 BAB. You have a choice of needing 11, 16 or 13, 13, 18. In the first case you average .75 hits. In the second you get .95 hits. It's better, but not hugely. (If you only need a 2 to hit, then it is MUCH better).