Of course, it is true. It never ended up happening because Ron Jeremy decided the plan was too outlandish (like a TV show...) and he backed out before the ridiculous scheme got to the execution phase. No matter how crazy the plot and how ludicrous the people in a movie act it is pretty much impossible to place it as unrealistic unless it actually violates the laws of physics. It turns out that the laws of psychology are mutable enough and flagrantly violated enough that in a large society pretty much any crazy damn thing you can imagine has already come true.
It is a little bit like reading Dan Savage's sex advice column. Nearly every time I read it I end up finding out about some other completely wild thing people want to do during sex and there is always a big internet community out there talking about it and trying to help people experience it. Try it yourself: Think of some crazy thing that obviously nobody could want to do during sex and then google it to try to find information from others who are turned on by it. Finding anything that doesn't produce a few hits is nearly impossible.
The world is a bigger and weirder place than we can ever imagine. 7 billion people can get up to pretty much anything and people are pretty much incapable of imagining the extent of the things they get up to.