I'm inclined to disbelieve the story because of this. Developers use Nexuses (Nexi?) as a reference platform, and manufacturers know that if their device doesn't run something a Nexus does, then the fault lies with them.
Completely eradicating Nexus and the concept of a base platform (contrary to myth, the Nexus doesn't run "Stock Android", but "Stock Android with Google's recommended extensions") would make many of the issues Google has been trying to fix a major headache again.
It's possible that Google intends to release the G branded phones in parallel to the Nexus devices, or that the G branded phones will be reference platforms after all. But the story as written seems improbable.