While this answer doesn't address whether or not the story was a hoax, per se, it does summarize the commentary from this review of Dr. Ian Stevenson's book which discussed the case.
First of all, Stevenson did not witness any of the sister's behavior himself.
The 14 cases he cites [in the book, including the Pollock one,] rely on nothing more than ...
Dr. Jim Tucker and Dr. Ian Stevenson from the University of Virginia School of Medicine have done research on the topic and have published books detailing the accounts of many children who claim to remember "previous lives".
Here are some examples of the literature on the subject:
Twenty Cases Suggestive of Reincarnation
Life Before Life
The Skeptic's Dictionary includes a 'skeptical' article about Ian Stevenson's work, which says,
"There is nothing that could be discovered by this method that could ever falsify the reincarnation hypothesis."
Stevenson spent a lifetime (well, from 1961, starting at about age 43) looking for stories which he couldn't prove to be false, and found some.