These guys would have to change the Title, Color and purpose/use of the mana draught to make it a skull mug. I could see title and color, but how the hell they gonna make it act like a skull mug too? They would also have to convert it from a single use [like a potion] to now a container. Maybe someone just trying to bring the value down

and made this this rumor up to begin with.
I hope this is a rumor.
But hey.. ill throw here my guess about the bugged items that changes names, color, weight and behavior.
Whats the first item with the "Mana Draught" graphic ever created in UO? Maybe im wrong, but i think its the Skull Mug.
What is easier for a dev when they want to create a new item like a Mana Draught? From a lazy developer perspective: easiest is to use the Skull Mug object and then use *Inheritance just to change a few things like color, weight, name and purpose.
Now think on any other related items...
(inherited object --> original object)
Balm of strenght --> Bottle
Clockwork Assembly --> Winch
a Hydra Scale. --> dragon scales
Sand --> Straw Pillow
An Arcane Gem --> Worldgem Bit
etc etc etc.
Then, when the exploit is used.. the item just turns into the original (or proper developer term: base object).
Well.. this is not a fact, this is just MY guess.
*Inheritance:
http://en.wikipedia.org/wiki/Inheritance_%28object-oriented_programming%29
From Wikipedia:
In object-oriented programming (OOP), inheritance is a way to form new classes (instances of which are called objects) using classes that have already been defined. Inheritance is employed to help reuse existing code with little or no modification. The new classes, known as Sub-classes (or derived classes), inherit attributes and behavior of the pre-existing classes, which are referred to as Super-classes (or ancestor classes). The inheritance relationship of sub- and superclasses gives rise to a hierarchy.