My 3 year old tabby thinks its great fun to hide, and then leap out from hiding as I (or worse, my wife) walk by and attack our legs – oftentimes biting.
On the one hand, it’s adorable. On the other, it hurts and I’d rather that he stop. My wife says if he bites her once more she will skin him.
How does one break a cat of this habit?
Your cat has a strong desire to hunt. You can either provide the prey in the form of a toy you regularly use to play with your cat, or you can provide the prey in the form of your ankles. Whichever you prefer. Think of your cat like a hyper kid that needs play time in order to drain his energy enough to get him to go to sleep.
Pets are very quick to pick up on whatever’s fun. Owners often don’t realize this, because your cat probably has tried a hundred different things on you, that you didn’t react to, but this one you did and it was fun for said cat.
The old squirt gun is often very effective at stopping a cat. Or you can pretend you like it. A real cat won’t do anything that pleases you 
This.
None of my indoor cats are into ankle biting. Several just bite, but not hard, when we play. No big deal. It’s part of their showing ownership and affection.
OTOH, one of the feral cats I take care of outside bites me on the ankles, but only because he doesn’t want me to leave. He was the last of the colony to allow me to touch him; now he craves my attention. It took me two years of slowly working with him before he allowed small scritches on the top of his head. Now he sits on my lap and buries his head into my arms. But if I haven’t met his expectation of the moment and put him down to leave, he bites me on the ankles. I have to do one/two last pets before I can go.
It appears that I may have been guilty of sending him mixed signals; as I said, it used to be cute, and I’d respond by petting him. Now it’s annoying and I’d like it to stop. If I start squirting him with water, will he get confused and become more psychotic (than he is already)?
Are there toys that are especially good at feeding off this hunting instinct? He goes through spurts where he will play with a plush mouse until it falls apart; but lately he thinks plush mice are all boring and stupid.
Get one of those long sticks with a string with some feathers on the end. Make it so it’s fun for both of you, because you’ll need to go “cat fishing” on a regular basis.
Rub hot sauce on your ankles.
Luci does this thing where she’ll grab at your arm start biting and kicking. (And as she’s eight-years-old, she’s probably not going to be out-growing it any time soon) I’ve found giving her a toy really quick works. I’ve noticed she tends to do this right after she eats, or when I’m making the bed. Have you noticed a pattern, when he’s more likely to do so, or is it just at random?
Perhaps as soon as he does it, grab him and pick him up and say, “NO” in a very stern voice.
Mostly in the morning – his way of greeting me, I guess.
Or tie a dog to you leg. But that might not look right.
A cat we used to live with did this. I am convinced this murder-beast was whelped in hell. He would wait until I was at the top of stairs to ambush me. The bastard was as docile and loving as a teddy bear with my wife, a persian/siamese mix that was the most beautiful cat you’d ever lay eyes on.
With the soul of a jackal!!! We had to re-home him once he made bullying our son his favorite pastime.
I’d add one step:
Grab him, pick him up, say "no, and then…
Open your hand and DROP him back on the floor.
(on a hard floor, drop him from waist height; on carpet, maybe a bit higher.)
The point is to surprise him and scare him a bit.
My cat does this, but I’m guilty of encouraging it. Despite the flesh wounds, “Kill the Hand” remains a fun game for both of us.
Same here. But your cat knows it’s your hand and is likely still holding back and just playing. This is obvious with my cat when I’ve made the mistake of doing the same thing with a plastic bag or sock covering my arm. Then he doesn’t hold back and if you’re not careful you’ll need stitches.
Oh, she does. It’s all KILL KILL KILL lick lick lick KILL KILL lick rub run away.
I’d just discourage it and switch to something fun. To discourage, start with a foot stomp and a loud “No”. I also use a “ssssst” noise. You can also try the loudest clapping noise you can make. You can also use a squirt bottle or a squirt gun, but you may not always have one on hand. Basically you want to quickly interrupt the behavior and make it not fun.
To feed the prey drive, look for toys like feathers or shiny objects on string. You can find some on a stick that you can swing around, or some that you can hang from doorways. If you don’t have any catnip mice or little mylar balls, get some of those and throw those out for the cat if you see him coming.
Yeah, it IS cute, but the problem is she usually does this when I’m making the bed for some reason. So it’s not always convenient. 
Ever do the hand under the blanket? That’s always a fun one.
I had a cat who would do this as soon as we would get ready to go to bed. I don’t know how something can be equal parts annoying and hilarious, and yet that’s how it was.
But he was the only cat that I’ve ever had who was into ankles.
Try to redirect his attention from the ankles. When you or your wife walk past that area, drag a fishing pole toy behind, or belt or whatever you have handy that you don’t mind him attacking. He’ll soon come to see the toy as prey instead of your ankles.