This passage was written in 1624 for an event that Smith claimed to have taken place in 1607. Over the centuries, a general disagreement has rippled throughout the historical community whether he actually spoke the truth. Apparently, Smith's first claim of the now famous rescue was referenced in a letter to Queen Anne in 1617, which would have been before Powhatan's and Pocahontas's deaths.
In the mid-nineteenth century, historians began to question the validity of his report based on the length of time that had passed between the event and Smith's documentation. Later in the century, another historian claimed Smith had lied about his eastern European travels based on Hungarian resources.
Since then, scholars have argued back and forth whether Smith spoke the truth about the Pocahontas rescue. In the 1990s, historian J.A. Leo Lemay wrote that Smith was generally considered to be an honest man and had no reason to lie. This statement is very interesting when Pocahontas, then Rebecca Rolfe, met Smith for the last time in 1617 just before her death. She was upset with him because she had been told that he had died many years before and went on to say "because your countrymen will lie."
While her statement doesn't specifically say that Smith was the one to tell his comrades to fabricate his death, he frequently lied to the Powhatan people during his time in Virginia. True, he was a military person and some would argue his misstatements were necessary for strategy.
Interestingly enough, Smith had more than his fair share of romantic adventures. When fighting the Turks in Hungary, he was captured and sold into slavery. Smith claimed "the beauteous Lady Tragabigzanda" had fallen in love with him and helped him escape. Lady Callamata gave him "succor" after his flight from captivity, and Lady Chanoyes "bountifully assisted" him when he had escaped pirates and was driven ashore in France.
Some historians say Smith may have told the truth about Pocahontas, but believe it may have been a ritual that he misunderstood. Anthropologist Helen Rountree, one of the leading scholars on Powhatan culture, gives credible arguments that Pocahontas, a girl of approximately eleven, was never at the event where Smith alleged she rescued him as it was an adult affair. She contends that Smith's life was never in danger. The Mattaponi, Pocahontas's tribe, also claim through their oral history that Pocahontas was never present for the same reasons.
Since there will never be any way to prove or disprove the argument (barring time travel), each person will have to arrive at his/her own conclusion. I think it's quite obvious which side of the argument I believe.