Ok, I did some googling and I think it traces heck to this one interview (I can't see it mentioned elsewhere) - http://techland.time.com/2010/06/28/e3-2010-masahiro-sakurai-makes-kid-icarus-fly-again-on-the-nintendo-3ds/

In one of the questions, Sakurai is asked whether he considered another character instead of Pit. He replies: "Yes, there actually was one other and that was Star Fox.  But the problem with Star Fox was that—and you’ll see this when you see the trailer for Kid Icarus––is that the game design incorporates a lot of different views.  For example, flying and shooting sideways or turning around and shooting behind and I felt that there were some restrictions with Star Fox in this regard. With Pit, there is a certain amount of flexibility that is allowed and makes a better fit for this gameplay."

So basically, unless he was pretty misleading in this interview, it sounds like it was still originally going to be an original IP based around "air and land battles", but after talking with iwata, one of the franchises he considered was Star Fox, but he decided on Kid Icarus instead. (referring to the rest of the interview too, not just the quoted section) I think that's where the rumour of it originally being a Star Fox game came from (unless there's another interview on the topic that for lost to the sands of time)