Since he seems like the only source of the story, it sounds more like an opportunity for Bill Curbishley to poke a bit of mischevous fun at the organisers with a good story to me.
I can't imagine that anybody in the UK doesn't know that Keith Moon is no longer around.
All the bands are reportedly going to sing live over pre-recorded backing tracks. There are several examples of high profile gigs where archive footage of a former, or deceased member, has been projected on the big screens and synched to the backing track. My guess is that the approach was to see if the Who management or the Moon estate would give their permission for something like that...but it was just too good an opportunity to resist turning into a wry story.