Naturally, I mentioned this to my German hosts here, whereupon they all looked at me with total confusion. I described the story, the ornament, the rules, and that it's generally known in America to be something that they were supposed to be doing every year over here. None of them had heard of it.
Later that day, we were walking the streets of Nürnberg when we passed a shop window displaying ornaments. There, in the center of the window was a glass pickle. Proof it exists! As we wandered the Christmas market, I spotted a stand stocked with every possible type of blown glass ornament, including all kinds of vegetables (would you care for a glass garlic bulb on your tree?). They had pickles of several sizes, so S leaned into the stall's proprietor and asked what the deal was. She explained that it was an upper Franconian tradition, and since we here are some 100km away from that region, perhaps it had just not migrated far enough.
Today we had some visitors from further north, so I asked them about it too, and they also had never heard of it. A little research on the internet even mentions a connection to a town in the region where they're from and still, no recognition of the pickle story. I also found a comprehensively researched article that seems to indicate that it's a total fabrication, milking the enchantment Americans seem to have with Germany at this time of year.
Whatever the truth is behind the pickle tale, it's made for a bizarre yet entertaining theme for the holiday.