I think this all has plausibility, the problem is that nothing in the game supports the idea of Ulfric committing terrible atrocities in Markarth other than this biased account. Nobody in Markarth or anywhere else confirms it. The idea of Ulfric being bloodthirsty and war-crazed is also contradicted by his actions in the game. Killing Torygg was ruthless, but it was a calculated ruthlessness. He doesn't carry out pogroms or anti-imperial slaughter, he doesn't execute anyone except Tullius and only kills Rikke because she will not stand down. The imperials also have motive to scapegoat Ulfric. All this means I think at least a cautious interpretation is warranted.
Oh, I don't think Ulfric generally is warcrazed and bloodthirsty, far from (I
love the guy, he's one of my favorites, and had I only had a PC instead of a PS3 the "marry Ulfric"-mod would definitely be in my game

). The middle-aged Ulfric of 201 certainly is not. But I'm saying, if there ever was a time in his life when he was unbalanced and might have done things he later would regret, I think that would have been around the time for the Markarth incident, considering what happened to him during the war and all. And a traumatized person (PTSD, anyone?) might do things he ordinarily wouldn't.
I'm not saying he was the one who executed the orders from Igmund. I'm saying it is in fact possible he might still have been around and was involved in it. Sure, nothing except the book suggests it. But nothing contradicts it, either, and considering the circumstances, it is
possible.