I wouldn't say that it was dementia, but it was a long time ago and he was a child at the time. His family probably did say shit like his uncle was eaten by cannibals and he believed it. Family folklore is almost always bullshit.
Similar to the Elizabeth Warren thing. She grew up being told by her family that they were part Indian and being from Oklahoma she just believed it, but it turns out they were just wrong. Lots of families claim native heritage in that region but they're just wrong.
People tend to just trust their family, especially their parents and grandparents.