Yeah It disrupts the chakra. Pain used that against Jiraiya and against Kakashi. As long as they are stabbed, they are unable to control chakra affectively.
However, Naruto has the Kyuubi's chakra, which should counteract Pain's chakra rods. I mean the Kyuubi's chakra instinctively rejected Fukasku.
Its time Naruto use it. There's no other choice at this moment. The Sage Chakra would just become corrupted by the rod if Shima summons it back. Pain has turned up the heat, Naruto has to as well.
Fukasku is definately dead, there's no way his little body can withstand a blow like that. It seems the ole troop figured something else out about Pain. I'll have to wait for the translations to see what's going on.