Hey Chuck, you been hangin' 'round with those overly-adversaral types too long, buddy; the hyperbole in that sentence wasn't intended to be taken literally. It refers to the position -- #16 on the Universal Standard Marketing Cliche list, I believe -- that the product being sold is the special choice of company insiders or workers "in-the-know" and of special, higher quality than what is offered to their ordinary customers. Other examples might be "Beam's Choice", "Elmer T. Lee's Single Barrel" (as opposed to normal "Blanton's"), or even Dalmore Scotch's "Stillman's Dram", which is remarkably similar (the story that is, not the Scotch).
Also, Cecil/Coyte claim that Herbst was indeed marketing an "Old Fitzgerald" brand, despite that neither you nor I have ever seen any further evidence than that ridiculously-doctored photo you noted. They also (not surprisingly) produced "Old Judge" and "Benson Creek". Perhaps it was the JUDGE who had the keys?
Well? Mike? Was there a Judge John Fitzgerald in or around Frankfort? (naah, probably not; doesn't sound like a particularly effective name for someone involved with politics... or whisky)
At any rate, it could have been the Herbst outfit who came up with the gauger story. But that tale is just so reminiscent of Pappy's "touch" that I still lean toward thinking it was his. Salesmen often have alternate stories to fit special circumstances; perhaps he told that one to customers who didn't readily respond to his claim that local bootleggers bought Old Fitzgerald bourbon from him to improve the flavor of their 'shine.