Mark Evanier writes about a rumor that has sprung up in the fringes of the Internets here and here. Click on the links for the details, as I am hesitant to rehash here, and Mark does a better job of covering it and analyzing it. I just wanted to add a couple of things that made sense to me (that's what this blog is for), that I e-mailed Mark about:
I think one reason it came about is that Kirby's obituary most often lead with the fact that he was best known for appearing in Crystal's films.
Another factor is that Kirby didn't appear in City Slickers II. I learned while reading The Week magazine (thanks again for the subscription, M) In their obituary, they quoted the London Daily Telegraph that filming City Slickers was a "trial for Kirby, who had to receive injections each day before filming because he was allergic to horses". Occam's Razor aside, there could be other reasons Kirby wasn't in II besides being blacklisted.