Crumbles, I've heard the same thing, though with celebrity rumors, it's always difficult to really know the full truth. When I heard about the vitiligo, my suspicion was that it was the reason behind Michael Jackson's signature glove on one hand. It probably started to appear on his hand and prompted him to don a glove to hide it.
I don't actually know what his children look like, I've never seen them pictured without veils of some sort covering them. If they are light-skinned, that likely is because their mother has light skin, combined with keeping them covered so completely when outside, which would keep them from getting tanned at all.
I really don't know how Michael Jackson has gone about getting his skin lighter. If you find out somewhere what was used, perhaps we can figure out how it works.