There is some truth in this. IE had a box model a bit like TeX's. Divs stacked inline and spans sat side by side so you easily make very sophisticated layouts. Navigator's box model was dumb as a rock in comparison. Divs started a new vertical context like they do now. So Navigator's model was standardised as the lowest common denominator. It would have been pretty much impossible at the time to retrofit IE's model into Navigator, and it was years before inline blocks were supported in Firefox. It's not so surprising that Microsoft didn't downgrade their browser to meet the standard.

It's also useful to note that much of what people loved about the IE box model got immortalized into the standards as box-sizing: border-box. That bit of "required" boilerplate in almost every "Reset CSS" and CSS framework is a forever ode to IE had an easier box model to design with, and now it's the "opt-in standard" that most wild CSS opts in to.