DY: The story is called a “maaseh” given with no source, almost no names, no dates, no geographic location besides a vague “somewhere in Asia” (while R Meir Sha”tz lived in the Rhineland)… and by the looks of it it long postdates the time when the story reportedly took place. (Looking at the title page, apparently by some 800+ years.)
The problem with these sorts of stories is that when they deal with real people they have to stand up to real historical scrutiny. Just being printed in a sefer isn’t enough. It’s reliable if it cites a reliable source, historically speaking. Dunno who wrote the sefer, so I’m not going to start on questioning whether you can think it’s reliable because this guy wrote it- just looking at it from a historical perspective, it doesn’t wash.
(Though it was interesting reading- the version I remember from elementary school had a lot less detail.)