"Is this quote common knowledge, or has it reached the status of arcana?"
This has a long history. Redstockings and Off Our Backs issued a thick packet on Steinem's CIA activities at a well-attended news conference before the book of the same name (Redstockings) was published, and then included a chapter on them in the book. The major media did not give this the play of RS's Miss America protest, but the left paid attention, as did the Village Voice. When a major publisher reissued the book, Steinem threatened to sue if that chapter wasn't deleted, so it was. Redstockings then reissued the packet and denounced their own publisher, leading some critics to denounce Redstockings for taking the money instead of canceling the book contract. Finally, William Colby cited Steinem's CIA service in his memoir, to show that their hearts were always in the right place.
The gist of her participation was to publish pamphlets saying that race discrimination in the United States really wasn't as bad as the bad commies said it was, for distribution at international youth festivals, where she carried her "No Tests, East or West" placard to establish legitimacy. Along with this operation was the CIA's funding of the National Sudent Association, through Allard Lowenstein, for similar duty.
The WashPost's exposure of Steinem was part of the flurry that ensued after Ramparts exposed the NSA connection, and particularly the list of liberal foundations that laundered CIA money. Enterprising reporters would amuse themselves on slow days by combing those foundations' records for additional CIA benefactions, and then fish for quotes. When they caught Norman Thomas, he said he hadn't realized the money came from the CIA, and was surprised by the news, but wouldn't have done anything different.
Ken Lawrence