Just rumors, according to Daniel Waters (screenwriter from Batman Returns). Superhero Stuff You Should Know did an interview on their pod with Waters about Batman Returns. From memory, he said he brought up the idea of having a Harvey Dent cameo, and Burton said no, but Shreck was always Shreck.
Billy Dee talks about it in his autobiography, What Have We Here?
"[I heard] that Tim Burton was making Batman Returns, the sequel to the 1989 original, and I wasn't going to be involved. Although I'd signed a one-picture deal when I made Batman, I expected that my character, Harvey Dent, would morph into Two-Face and that I would play him. That was the reason I'd taken part in the first place. I wanted to play an evil bad guy. But Burton's sequel didn't include Two-Face, and that was that. It was his prerogative.
"Two years later director Joel Schumacher took over the franchise and returned Two-Face to his first installment, Batman Forever, but he cast Tommy Lee Jones in the role without ever contacting me. I didn't even get a courtesy phone call. A rumor that the studio had to pay me to make room for Tommy was false. As I said at the time, you only get paid when you act.
"Although disappointed, I was open-minded. Tommy was an actor whose work I always found interesting, and his interpretation of Two-Face was no exception.
But it wasn't what I would've done. I imagined playing Two-Face as a flamboyant, predatory, omnisexual narcissist--someone whose unbridled evil thrilled and delighted him to the core. I don't want this construed in any way other than the way I had in mind: a non-obvious choice, something that would have shocked and entertained fans and critics and been a helluva lot of fun for me. I wanted to be outlandish. I wanted to go against type. Squeaky clean is no fun.
In the end, it was simply a missed opportunity. I still occasionally think about it. I'm still curious to know what I could've brought to the table." Pg. 230 in the hardcover edition.