Honestly, after ruminating (and Fatman already clarifying things I was about to say, too), the Steve claim is more than likely a falsehood. Let me go into detail why:
1) Noatesty. You know Noatesty? Yeah, that guy who leaked PP before anyone else did, before that watermarked video started spreading among insiders... because they were a play tester. Their claims on what was in the play test builds they played were as follows: Ken, Incineroar, and Piranha Plant, the last of them cited as a 'DLC character pretty much finished'. Nowhere is there any mention of Steve or any sort of Minecraft content.
2) The Ken leak. We all know by now that the Ken image leak from way back when is as real as it gets. The play tester screenshotted that, presumably sometime during or after August (as that's about when the picture started floating around). In that play-test build, we had at least Ken and Incineroar... and 'supposedly' Steve. Why would they leak Ken when everyone and their mother already predicted he'd be in? Likely because it was all that they had of substance apart from Incineroar. You'd think a leaker like this would leak out something as monumental as Steve being in test builds, but they leaked Ken. This one isn't as concrete as the Noatesty claim, but it is something to keep in mind.
3) Polar's source, whose track record is impeccable, claims that no one knows the DLC. Now, if Steve was present in those early play-test builds, wouldn't everyone know that he's DLC? It lends more credence to the idea that Steve is a popular water cooler rumor rather than anything solid.
4) According to Fatman, a person I highly trust with connections to insiders (including our own Polar), several play testers have called Verge out on the Steve claim, stating that he was nowhere to be found in their test builds.
Basically, everything points against this. As a result, the rest of the Steve and Erdrick claims from Xenother's source(s) are ones to be taken with not a grain of salt, but with a massive wheelbarrow of salt. Don't get me wrong, I have nothing against Xenother. That being said, I think they should be more careful about what they claim with certainty when there are a lot of holes in what they present.