Now it appears to have been fiction. Perhaps an urban legend, or perhaps a deliberate hoax to to create support for a British Lord's agenda. From Cabinet of Wonders:
The Guardian article seems largely based on the digging done by Heresy Corner who have been looking into this and tracking the story. They were initially sceptical, due to the lack complete lack of hard facts and Lord Alton's gullibility. Further monitoring of the story left them even more disillusioned with the story but intrigued by the "mythic quality" of the story (as seen in the story of Siegmund and Sieglinde and if you check the GSA Wikipedia page the bulk of it is examples of this theme in popular culture). They then watched how the various tabloids managed to flesh out the very few facts in the case into a full-fledged story with plenty of believable "details" none of which have any basis in fact (or reality). So, in the end this may be the importance of this story: seeing an urban myth condense out of word-of-mouth and hearsay, bulked up with plausible sounding background until like some abomination stitched together by Doctor Moreau it staggers out blinking into the world where it takes on a life of it's own raising it's ugly head from time-to-time when this issue crops up in idle conversation (as well as appearing in pieces written by idle journos who don't do any digging).