Great story, but not sure it's true..in the biog of the group I have ('Reelin' in the Years' by Brian Sweet) it says
'...many suggestions were made, some patently less serious than others - including Big Nardo and The Eight Grade - and they eventually settled on Steely Dan..'' 'Steely Dan' is, err, something of a personal nature

in the William Burroughs book 'The Naked Lunch', a favourite book of Becker & Fagen apparently.
the boys performed and toured under 7,566 other names
At a rate of one gig a day, that would take nearly 21 years...