Did Peter Jennings and Mike Wallace really say this:
It sounds improbable to me. (For one thing, what are the odds that Mike Wallace did not know that Peter Jennings was not a U.S. citizen–and why would Jennings fail to correct him on that point, given that it is one of the hinges of the discussion?)
On the other hand, Here is a purported earlier version of the story.
I do not know how accurate MediaWatch is considered to be. Their 70° list to the right is pretty apparent, but that does not mean that they actually invent things.
Snopes doesn’t seem to have it. I guess the next search would be to see if any transcripts of the PBS Ethics in America series survive.
Here’s a source for the story that has no particular animus against Jennings or Wallace:
http://www.pbs.org/wgbh/pages/frontline/shows/press/vanities/fallows.html
It’s the first chapter of Breaking the News by James Fallows.