This kind of syntax is certainly used, and I don't have the impression it is colloquial.
What is confusing about your example sentence, is that you punctuated it as is disturbed land is direct speech, but in reality, you're quotes are what is sometimes called scare quotes. In that case I would not put the comma inside the quotes:
The insect propagates best near "disturbed land", that which is being cultivated by humans.
Alternatively, do not use scare quotes at all. Disturbed land has a special meaning in this context, which is indicated by the quotes, but you can convey the same thing with italics:
The insect propagates best near disturbed land, that which is being cultivated by humans.
That said, let's look at the that which construction.
I would agree that that [land] which is cultivated by humans is the apposition of disturbed land. They describe the same concept, the land where the insect propagates best.
That is indeed the antecedent of which, but it might be easier to realize that land has been elided (as I indicated earlier):
That land, which is cultivated by humans.
In this case, that land is the antecedent of which.
To illustrate the apposition, we can inverse the two parts:
That land, which is cultivated by humans, is called disturbed land.
And even in the complete sentence:
The insect propagates best near that land which is being cultivated by humans, "disturbed land".
In this version, we could omit that without changing the meaning of the sentence much.