He really said it. In KPHO channel 5's reporting* in regards to the Zicam issue a local resident says "I still can't smell smoke, uh I can't smell electrical fires, I can't fly solo airplane anymore."**
As a pilot I've been through a many FAA Medical exams and NEVER been given a smell test. Medical requirements for pilots are laid out in 14CFR67 (Formerly know as FAR part 67). None of the requirements require any "smell test". Seems to me (a pilot but not a lawyer) the only provision that could be used is 14CFR67.313 which says the Doctor can deny a medical for any reason he deems unsafe. The catch is that you pretty much have to beg the Aviation Medical Examiner (AME) for such a disposition. The AME will not ask "how is your sense of smell". It's only if you say "Gee doc, I can't smell smoke, nor electical fires. I think this might be a safety of flight issue in the cockpit" that an AME would have any reason to take issue. I suppose in that case the AME could issue a medical with a limitation to the effect "must take a passenger with a working nose", but I've never heard of such a thing.
In my opinion, that statement is 100% USDA grade A BS. I'd further wager your lawyer gave you the talking point and pointed you at the camera. Better hope I don't land (pun-haha) up on your jury.
(standard disclaimer - I'm not associated with the ZiCam company in any way, save that as "paying customer".)
* I don't think this is a permanent link and I can't find same. Suggest searching for "nasal spray warning hits home for valley man".
** The wording used is somewhat awkward. A pilot would say "I cannot pilot an airplane anymore". And even that does not capture the full deal. Solo means you're the only person in the plane. However I blame this on the pressure of the cameras.