I think it was something from back when I was reading a LOT of Carl Jung and later Jungians. I liked the class, but sometimes it was more like a hallucination than a grad course in psychology. There was even a good bit of Jungian inspired art (LSD may have lent some inspiration too).
This story used to scare the crap out of me! It didn't help that there was an old lady who lived in a house that was propped up. We were always told to stay away form that house other wise we would get eaten or some other bad thing.
Some are scary and then you have the ones who are super nice. I just remember learning about the lady in the chicken leg house when I was really young. It's odd to have it come back almost 18 years after first hearing the story.