OP left out the best part of the story, which is only slightly less likely to have happened.
They told this story to the Vilna Gaon, and he said, “That the dreams happened and they found the crucifix doesn’t surprise me – that’s a befeirushe yerushalmi. What surprises me is that a chassidishe rebbe knew the yerushalmi!”
And they went back and told R’ Zishe what the Gaon had said, and he replied, “indeed, I did not know the Yerushalmi. So how did I know what to do? The same way the Yerushalmi found out, I found out.”
They undoubtedly went back to the Gaon and received another rejoinder, but alas, I haven’t heard that part.