These were just rumors. I remember those. Like many others, they turned out wrong.
On the other hand, several bloggers, from Gruber to the ATP crew claim that several Apple engineers told them, off the record, that they never planned Touch ID for the X. I agree it's speculation, but I find their sources more believable then any of the sensational early iPhone rumors. While parts leak and software leaks, I don't think any of the leaks ever came from Apple R&D and early days of the process, and all was just speculation and guesswork.
On the other hand, a lot of people almost want to paint Face ID as a flawed compromise. And people generally prefer the "what XX doesn't want you to know" rumors.... Personally, I do believe they decided to go for Face ID and that they could've embedded the Touch ID into the screen if they wanted to. And the idea that your phone recognizes you in a similar way people do, without you having to scan your fingers just seems like something Apple would pursue, not choose as 'plan B'.
We'll never know for sure.