"The police knew these things were not true, but they chose to go along with them."

Very good point. They could have cleared up issues instead of perpetuating them.

I think EVERYONE panicked that day, including the "eyewitnesses". I remember people talking about a man with wires coming out of his coat. I think people saw what they wanted.   

One thing I notice here in the U.S. is that the authorities in the U.K. seem to take forever before giving out any information.   On 9/11 the police spokespeople were giving whatever information they could.   From what I heard on BBC Worldwide, the authorities in the U.K. were remaining silent for hours, leaving the pundits and the public to spin out of control.

By the way, if anyone here in the U.S. gets XM Radio, I urge you to check out BBC Worldwide. It is a real eye-opener.