I agree with the OP and with Chris on this one . At this point in the story, the narrator does not know whether or not it is true. Both options ( true and untrue) are still possible, so 'was' is the more correct verb form. This is different from 'If it were true', which we use in hypothetical statements when we know that something ISN'T true and are therefore imagining an unreal scenario. Does it matter? No, not really. The fact is that very few of us use 'was' or 'were' correctly in these situations. In most conditional/subjunctive statements they are virtually interchangeable. I really wouldn't worry about it too much.

Yes, if the truth is not known, then the sentence is not a counterfactual, and "was" would be the correct choice. "Were" is an error. Here, Conan Doyle made a mistake because he was being "hypercorrect." Even in Arthur Conan Doyle's time, subjunctive was beginning to disappear, and children and uneducated people would say things like "if I was a dinosaur". Conan Doyle wrote Sherlock Holmes as a very educated person who never made grammar errors. Doyle was so afraid of using the low-class "if I was" that he used "if I were", even when "if I was" was logically the correct choice. This is similar to things like "Bob and I". Technically, "I" is a subject pronoun and "me" is an object pronoun, but many native speakers use "me" whenever it isn't the first word in a sentence, regardless of whether it is the object or subject of a verb. So, many native speakers will say "Bob and me went to the park." Teachers tell them, "No, that is not correct: You should say Bob and *I* went to the park." Students then learn the incorrect lesson that "Bob and me" is always wrong, and start saying things like "She gave apples to Bob and I." This is an error that they wouldn't make naturally, but they make because they have associated a particular structure ("Bob and me") with being low class, even when it is grammatically the correct choice. These kinds of errors are known as being "hypercorrect." In other words, when uneducated people make start making a certain error, educated people often start making the opposite error, because they are so afraid of appearing uneducated that they overcompensate.

Both are correct, this is one of the little oddities of the English language. 'If that were true ..' is more formal than 'If that was true ...' But there is no difference in meaning. They come from the second conditional where you can see this!