Unfortunately I don't know of any major craft fairs in B/N, and I've lived around here my whole life. It is odd though considering it's not really that small a town and like you said we have Wesleyan and ISU both! Bah! And an indie craft fair would just be beyond awesome.
The shows around town at the schools and what not aren't too bad. There are some ummm..less than interesting things of course (it's to be expected here I think. lol), but there are some really cool things too. They're at least worth a trip to check them out especially if you already live in town. If I remember correctly, I think it was the show at BHS (Bloomington High School) that was the best one I found last year. It was quite large, using all the hallways on the main level and the gym, and there we lots of really great booths and items. Actually, that is the ONE I managed to find info about online just yesterday...it's on 11/4.
Also, it's not 'crafts' per se, but have you ever checked out the 3rd Sunday Market at the Interstate Center? I went for the first time last weekend and WOW is that the coolest event ever. It's mostly antiques and random stuff but there are some fantastic finds and not as expensive as you might think. There are a few crafts and such but mostly antiques and other random vendors. It's huge, they use all the bldgs at the center and have stuff set up even outside throughout the grounds, food and drinks and everything. But it only runs May-October so it's over for this year..something to think about come next Spring though!
...still begging for info on more craft shows in town