The latest rumour arose from Think Secret's prediction the release of a "proper" video iPod, rather than the existing generation of iPods which merely play video, although the distinction is perhaps a bit unclear to someone who hasn't been following the minutiae of Apple news with the proper amount of religious zeal.
The initial rumours were quickly followed up by O'Reilly and attractive looking mock-ups (via Engadget) of the video iPod started to appear as the weight of the rumours were strengthened by Apple's recent patent application for a virtual click-wheel.
The much-publicised mock-up of the video iPod
The rumours were then dissected in various blogs and truth blends almost seamlessly with total fiction. The rumour begins to take a life of it's own, and in this case if Apple don't now release a video iPod with a virtual click wheel people will be disappointed, perhaps to the extent that Apple's stock price might actually fall as they fail to meet people's expectations.
Me? As I've said before I haven't a clue what's going on, but want to hear my latest whacky conspiracy theory? I think Apple deliberately leaks most of these rumours, I think the entire rumour mill culture arising from Apple's traditional product secrecy is a vast focus group experiment run by Apple themselves. How does that sound? Want to make a rumour out of it..?
Update: Are these leaked pictures of a pre-production sample of the "real" video iPod?