Although the line is considered a marketing technique more than anything (at least, in the general sens;, I hate the view that the only thing the film industry is concerned with is profit, but I'm rambling), as the audience, we should keep in mind that there's a world of film, and the world we live in. Some facts have to be distorted for the sake of entertainment in film (someone mentioned A Beautiful Mind, a textbook example of this I'd say). Techniques can be used to really capture a sense of "realism" in film, but it's a sketchy argument all the same. EclecticEnnui mentioned Man Bites Dog, a good example of a sort of "fake realism". I don't really know the film you're referring to Mr. H-O-S, unfortunately.
Actually, most films with a historical examination would fall into this, and suffer as a result via immense (and sometimes poorly devised) revisionism, like The Deer Hunter, or a similar film. Westerns tend to pull this off a little easier because the conventions are laid out a little clearer. I digress, I think.
Some films can pull this off as a result of people passing the message around. The original Texas Chainsaw Massacre for instance, is barely true at all when you look at the details, despite claims otherwise (in the same way that many other barely-true horror films using elements of Ed Gein's personality as part of the monster are not). As much as it might sound like a cliche when it's just thrown off the back of a promotion, I think it's effective, at least to some, in extreme circumstances.
And Fargo does it hilariously, again off of bizarre/extreme events. The main issue now, is that when a film might use this phrase tongue-in-cheek, they'll be "ripping off Fargo". That makes me sad.