So I can’t actually remember who this rumor was we spread this rumor about, but I’m fairly sure it wasn’t him. By the early 90s (my teenage years) he was firmly “mum rock” no one was imagining him taking part in deviant sexual orgies;)
It happened with Klaatu, as well. A radio DJ (in, I think, Rhode Island) started wondering whether Klaatu was a reunion of the Beatles. After all, lyrics and music were credited to Klaatu, their first album was produced by Klaatu, no names or photos of the band members appeared anywhere, and the music sounded like the Sgt. Pepper/White Album Beatles. The rumour spread.
The band promptly shut up, and didn’t fully identify themselves until their fourth album. They turned out to be three guys from Toronto.
That rumor, about Rod Stewart anyway, was from the 1970s.
The point is that your rumor in the 1990s was recycled from one from the 1970s about Rod Stewart. “On the shoulders of giants” and all that…
According to Snopes this gets applied to different celebrities frequently, so in your era that may have been Jon Bon Jovi, which does sound familiar to me.
Styx was accused of putting a backwards message in the song Snowblind. On their next album, Kilroy Was Here, they put a real backwards message. It was: “annuit cœptis, novus ordo seclorum" which is on the back of the dollar bill.
This is because people usually watch the film on a TV screen. In the theatre, it’s clearly a crane.
There are a lot of rumors of hidden homosexuality in old Hollywood.
Cary Grant lived in a “bachelor pad” with Randolph Scott, and apparently were quite close.
Greta Garbo is another star oft considered gay.
In this vein, the Beatles had a song called, I believe, “Number 9” and, when you played it backwards, it supposedly said, “Turn me on, dead man.”
Some people think Pink Floyd wrote The Dark Side of the Moon to sync with the film The Wizard of Oz. It even has a name: The Dark Side of the Rainbow.
There’s an old rumor about Danny Thomas and glass coffee tables. It was discussed on this board back in 2012.
Yeah that seems to ring a bell. Still amazed I believed it though, even as a dumb teenager with no experience of such things 
There’s a persistent rumor that the five main characters in Scooby-Doo are meant to represent the Five Colleges of Massachusetts:
Fred: Amherst
Daphne: Mt. Holyoke
Velma: Smith
Shaggy: Hampshire
Scooby: UMass
Colleges were the source of the name of one of the characters in Thundarr The Barbarian. Ookla The Mok= UCLA, Mount Holyoke College.
Soundgaren did put “Satanic” messages on a song.
Cornell says things like “Satan is my master. Satan is king.” and then ends it with " I LOVE ya Satan, baby!"
It’s pretty funny.
There is always the theory that the novel The Wizard of OZ was some
sort of allegory about the Populist movement in the U.S. in the 1890s.
Discussed by The MASTER here:
https://www.straightdope.com/21341539/is-em-the-wizard-of-oz-em-a-satire-of-the-french-revolution
How about an urban legend started by a celebrity. Lucille Ball claimed that she could hear radio transmissions coming from her fillings.
I’ve seen stories claiming that she found spies during WWII when she picked up people speaking a language other than English.
They’ve been doing much better with the John Lennon is Dead thing for the past 44 years. Not trying to use a clone or lookalike helps.
That link tracks to a thread that links to another false rumor: that silent screen actress Clara Bow fucked the entire USC football team.