"I don't believe that crap about generals wearing this better armor, either"
Like you, I don't know about the veracity of this story. BUT, from my experience as a staff officer, I can tell you firsthand that generals frequently get to try out the new gear long before it's even procured, let alone issued.
As to the orders to the soldiers about body armor: the one thing that makes it plausible is the way it's enforced: not by the UCMJ, but by a threat that your SGLI "may not cover" your death. That's BS, but to a young man in harm's way, scary. Because of this, I doubt that it's an official "order;" more likely something like a policy guidance. Which, if true, stinks; and is probably rooted in a desire for manufacturer exclusivity (as someone already mentioned.)
I would never minimize the amount of C.S. enlisted types have to put up with in the military. I've seen my share of it, firsthand.
However, I still say this story sounds bogus, or at least incorrect in many details.
This "publication" has no reason to follow standard journalistic practices like getting confirmation, naming source, etc. It's not a news organization, in the first place, but a political activism group. Nothing wrong with that, but this is not a news story. It's an unsubstantiated rumor. There's not a single fact in it that is backed up reliably.
I never liked Hackworth. I don't like the publication as it now stands, either.
Again, I want to see the orders, or directive, or policy paper. Failing that, I mark the story as bogus.