..any truth to the rumour the FE was dyslexic?
Mildly so, yes, and this came directly from someone who knew him quite well.
the captain telling the f.o. he was a donkey?
Also true, it seems, but this is rather odd (besides not being all that good CRM, which was sadly lacking by some of the more senior local Commanders at the time, apparently) as I personally found that nearly all the local First Officers were
very well trained and had sufficient experience, as they did quite a reasonable time on the B737, prior to setting foot in the L10.
Now, looking at the possible ignition source, I recall the RJ incident at SIN (-500 acft) with the number two generator feeder problem, and suspect this could have been a possible scenario, as I knew the Commander on that particular flight personally (top shelf guy) and contained the difficulty in quick time, by shutting down number two engine, pronto.