The enchantment was undone by greed and apathy. You can still imagine he attained CHIM, or was taken by Daedra or whatever fate you prefer because the moon was being held up by the love the people had for Vivec. It doesn't solidify any canonical fate for Vivec. The fun thing about this event is that it can be what you want it to.
I wasn't completely surprised when it happened because I had a vague inkling of some catastrophic event. It was hinted at as far back as Morrowind itself, and some of the obscure texts posted on these forums between then and 2009 strongly suggested it as well. A lot of people hate Greg Keyes and blame this event on him, but it has probably been planned for many years now.
