I've read a few discussions about this. I don't think its particularly important either way. The consensus would appear to be, in the face of a lack of evidence, that Lennon probably said he'd listened to the band and probably Selling England, it would be a fair assumption that this is positive on some level. Beyond that it seems to me that Steve probably believes it, or else why risk looking foolish when you don't need to? But that doesn't make it true and he doesn't say where he has this information from, presumably a source he trusts. I think it would fit with the positive things Lennon did say about ELO around that time, (supported by George's admiration for Jeff Lynne) and maybe that's how it's been amplified. We can't prove Lennon didn't say it so I suppose the best response is to be dubious until evidence arises, if it ever does. I don't think that's the same as Steve being a liar, but maybe he'd be wiser toning it down a bit.
This is certainly true, and has been known for a long time, well over 20 years, and yes, it was a favourable impression. I seem to recall one of Armando Gallo's books from the 70's quoting it, but my copy is in the loft.