It was a pure rumor. IBM has never stated publicly that they were working on such a chip, and there is no evidence to believe that they are working on it now or ever. When it comes right down to it, it would be much better for IBM to be working on the PPC 970 and future POWER derivative chips than to work on retrofitting a Altivec core into a PPC 750, as the 970 design is a huge win for most Altivec code (because the chip is no longer bandwidth starved like the 74xx is and the 750 would be with an Altivec unit).
Lets just let this rumor die please.