possible 'rumour' of the script being penned by another?

It sort of happened like you described, and yes the writer wasn't happy, but he certainly wasn't screwed. Pretty standard filmmaking process. He wrote a script with the same basic premise (I think it only took him about a week), and sold it. He got paid, and what happens after that is no longer in his hands. Russell looked through scripts the studio had purchased, each with one-line descriptions, saw a Gulf War Heist Film, and then proceeded to write his own script, which he is absolutely entitled to do. The original writer wasn't happy his actual script wasn't used and that he only got a "Story By..." credit, and probably wanted to be more involved with the film, but that's not how Russell works.

The result speaks for itself. Great film.

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Read "Rebels On The Backlot" if you want all the dirt deets on "Three Kings." As far as the original script, even George Clooney, who did not get along with the director, (thanks to Russell's disdain for him), admitted that the shooting script bore little resemblence to Hindley's version. He was paid, but sued and received the "story by" credit.

On one hand, I feel for the original writer, (being a screenwriter myself), and he should have gotten his name on the credits in the first place, considering this sort of shady dealings happens all the time. And, without his original script, Russell would've had no basis to rework it into what eventually became "Three Kings."

But on the other hand, his involvement in the process should have been limited to the "story by" credit and whatever it was he got paid. Considering the lengths to which it was gutted by Russell, I don't know why he thought he was deserving of anything more. I certainly wouldn't have expected to be given a co-writing credit had I written the original, nor would I want him getting that co-writing credit had I been the one who totally rewrote it, using only the basic story. It's a complicated issue, but some have even said the original script was pretty bad, and so far from Russell's version that the two could've been made as completely separate movies.

I know this is almost two years later, but I'll chime in anyway, this is one of my all time favorite films, and Russell is one of my favorite filmmakers, and I just came across John Ridley's screenplay from 1995 (you can read it here: http://www.dailyscript.com/scripts/three-kings_unproduced.html ) beyond the idea of a handful of American troops finding a map and looking for gold on an unsanctioned mission that doesn't go that well, Ridley's draft has nothing in common with Russell's. None of the characters are the same, the structure isn't the same, and the tone/satire that make this film something bigger is completely absent. Ridley's was a macho B-movie with no character and terrible dialog & a long slog of a pointless narrative.

If you compare what he wrote to what the film became it's as if Russell was pitched the logline of the film and wrote it himself without even seeing the original screenplay. It is a fact that after he took on the project he and Ridley had no collaboration. Sometimes the Writers' Guild of America deigns not to give screenwriting credits to certain writers that contributed to a project, just because of the level of involvement that ends up on the screen, my guess is that's where the controversy with the credits on this film stem from. It's complicated by this having been a spec script by Ridley in the first place, rather than him being one of several people who took a pass at a project which is usually the case in a writer being left off situation. That's likely why WB had to work out a deal for him to receive a "Story By" credit, although they really should have just come up with a custom credit along the lines of "suggested by a story by John Ridley" because the story that was released is all David O. Russell's.