I never looked up any of the details, but did assume it to be true, knowing that Kenner had scrambled to change directions right as the figure was being released. I’m sure that LOTS of toys in the old days were FAR more dangerous than now, perhaps mainly just because companies were still existing in a kind of consumer Wild West where everyone lived in a kind of less litigious way.
Even so, I remember Dan Aykroyd as Irwin Mainway all the way back in ‘75, trying to convince consumers not to sue over his “Bag o’ Broken Glass.” Even late in the day (in the mid to late ‘80s), some toys still were pretty dangerous. And it seems like everybody was using harmful chemicals and plastics to manufacture them (lead, asbestos, etc.).
Ha, I love Irwin Mainway. I had plans to use a clip from one of those skits but couldn't find a copy online anywhere. It's the one where he's talking about the 'Johnny Space Commander' costume (a dry cleaning bag and a large rubber band) and asks Jane Curtin, right there in the heyday of the movie coming out, "I don't know, Miss Face, if you're familiar with the movie, Star Warzzz?" The way he says it just cracks me up.
Of course, being a Ghostbusters fanatic as well, I got to meet Aykroyd about seven years ago at one of his vodka signings in Mississippi.