Yes, George is real, and he is in WDW's Pirates of the Caribbean. The story I recieved from my Pirate friends is that George was one of the builders of the ride, and while working at the highest point of the ride (a tower in the burning city sequence) he fell to his death and since then the tower has been called George's Tower.
It is tradition for the Cast Members to say "Good Morning" and "Good Night" to George every day, and when they don't there is usually a significant downtime. Also, the massive amount of downtimes that Pirates experienced after the 2006 Refurb was largely attributed to George not approving of Captain Jack!
Personally, about 12 years ago I was on a trip to WDW with my parents, and we decided to ride Pirates while Spectromagic was going on. We took the right hand queue and got to the small staircase just before the "Skeletons Playing Chess" section, and we saw a man dressed in dusty work clothes, and a tool belt about his waist. We said "hello", but he didn't respond, but just staired past us. We kept going, and I knew those stairs came out on the other side of the "Skeletons Playing Chess", so when we wrapped around, I took a look down the stairs, and of course, the man was gone. When we reached the dock we asked the Cast Members if they had seen this man, and they said that we were the first people that they had seen in 20 minutes. I said, "Well, I think that we just saw George". They looked at me in shock and asked how I knew about George, to which I responded that I had read reports on the Internet. We then descibed the man, and the Cast Members looked at each other and said, "They did see him!"