I havn't heard that rumor, but I can confirm it to be totaly untrue. The game was complete for the 64dd, but never released due to the lack of support for the system in japan. Also, it doesn't add much to oot any how.
I don't think it was purposely started, just misinformation. I think that it was brought up that it was made for the 64DD released in Japan, and was interpreted and passed on that it was indeed released.