I wasn't either. Pretty crazy. Did the cutting of his hair symbolize his rebirth as a darker Shane?
The way I took it, and I'm not saying I am right, was that he learned that, if put in that situation, his hair could be a liability. So he was cutting in close so that wouldn't happen again. So, yes, it is his rebirth to the darker Shane, but I also saw it as a survivalist plan to cut his hair so that if he is caught between a rock and a hard place (or a fat man and a zombie horde) again, he could get out of it easier.
Great ending to this episode. It really caught me off guard. This Shane scenario adds a whole new depth to the dynamic of the group.
Also digging the relationship with Darryl and Andrea. Darryl is, by far my favorite character right now. He is just so honest and forthright about everything he does. I really respect his abilities and what he brings to the group.