Forgive me for reviving this old thread, but i had the same issue and as ccn mentioned, Arc's tool only handles one line feature at a time. I thus created my own very simple tool that performs this operation on a polyline layer, given offset and interval parameters as input from the user.
The tool is to be found here.
- For now offset and interval must be integers.
- The tool uses Split Line At Vertices (Data Management) which requires ArcInfo licensing.
- I've created it for my needs and haven't tested it much so I'll mention it was used only on Shapefiles as inputs and outputs.
- It won't split lines that intersect eachother, only lines at vertices.
- I'm willing to make modifications. This topic has over 9k views for a reason, I guess.