There is some truth to that!
Osage (I use a LOT of it) was very commonly used as tool handles in the past...among other things. Many of my vintage wood working tools have osage handles (they turn almost black because osage is so photosensitive).
I have used scrap osage for making durable hatchet handles. Seems anything long enough and fit for axe handles, I would turn into matching billets for bow construction (axe handles are cheap compared to matching osage billets). However, if you have lots osage around your neck of the woods (I don't), I would certainly make an axe handle out of it. I once used a nice, straight, knot-free piece of osage to make a wiping stick (some call it a ramrod) for one of my smoothbore muzzleloaders. It lasted for years under constant use.
BTW, I work osage with *dull* cutting tools. Sharp tools will often "tear" the osage grain apart rather than shave it off. Rasps and scrapers will do the rest. I learned this 'dull tool' trick from John Strunk, one of the authors of 'The Traditional Bowyer's Bible.'