I do believe it, for the story is, indeed, perfectly possible. If there was something which alerted security (eg an unreconciled activation of the security arch) or metal inserts fitted to the "man-bag" to keep its shape, then they would be loath to let the passenger and his bag on to the aircraft.
All airlines have the right to refuse travel to a passenger who refuses to comply with a security search. In this case, it would appear the operatives of the secondary search (which El Al, some Middle East airlines and all US bound flights have) were not satisfied with something.
For all the scoffing about these low-paid individuals, they are well trained in the job they do and part of the requirements drawn up by the DfT, CAA, FAA, Homeland Security etc are that any activation or alert must be fully investigated and the reason established before allowing the passenger to board.
It may seem humorous, but just supposing he had Semtex hidden away in a cigar tube in his butt? (known as a "charger")