There has been a lot of discussion on a lot of message boards about this. I would tend to think that it's a "true" rumor.
I saw LZ on their first tour - Jethro Tull was the opening band. Never saw them again. I disliked them, for the most part, ever since, but just a few years ago I had a revelation and couldn't get enough. Picked up Zoso, Houses of the Holy, Physical Graffiti, How the West Was Won & BBC Sessions - albums I never had before. Great stuff!