About a decade ago, when a major Canadian politician was rushed
to hospital becaise he was infected with the flesh-eating
bacterium, a similar streak of rumours made it into our news
broadcasts.

By similar I don't mean they were reporting that he was running
amok in the hospital raping little girls. First they reported the
truth, that he was critically ill and his leg had been amputated
to save his life; he was on serious antibiotics and the doctors
weren't sure if there was time enough for them to work.

The subsequent news reports became more and more extreme: he had
lost the other leg, then both arms, then half his chest cavity,
his condition was deteriorating from critical to edge of the
grave.

None of the subsequent stories were true, but they were reported
as fact. No one ever explained how these exaggerations and lies
received so much credibility.

I would explain it as follows:

The human propensity for exaggeration kicks in, something like
the game of telephone, where person A's speculation is developed
by person B before being passed on, interpreted as fact by person
C, and finally received by person D in a form quite different
from its origins.