This is hardly surprising. Anyone who knew Egypt didn't believe it in the first place, since sex with the dead is a laughably extreme position that no Egyptian Islamist group has ever espoused but is exactly the kind of overheated scare-mongering that can be potentially useful for opponents of Islamist politicians as Egypt's presidential campaign heats up.
In the presidential campaign, former Arab League Secretary-General Amr Moussa (who served as Mubarak's foreign minister for a decade) is the old establishment's preferred candidate. His main rivals are former Muslim Brotherhood executive Abdul Moneim Aboul Fotouh and current Brotherhood member, Mohammed Morsi.
Ahram's reporting should be seen within its traditional framework – serving the interests of those in power. That was Mr. Mubarak for decades. Now, it's the Supreme Council for the Armed Forces (SCAF), the military junta that has run Egypt since Mubarak's ouster last February.
Ahram under Mubarak was much like Pravda in the old Soviet Union. Consider the former president's September 2010 visit to Washington for Palestinian-Israeli peace talks. A photographer captured Mubarak, President Obama, Jordanian King Abdullah, Palestinian Authority President Mahmoud Abbas, and Israeli Prime Minister Benjamin Netanyahu walking the red carpet together. Mubarak trailed the whole group, just behind Mr. Netanyahu.