But ... this story rang distinct bells from my geology undergrad days, so I backtracked with Google Books.
One may thus draw pictures or write letters with squid "ink" and a squid "pen." Most remarkable of all, this is even possible with the ink and pen of fossil squids which lived millions of years ago.
- Bulletin of the Charleston Museum (1907)
The ink is not readily decomposed; onthe contrary it is occasionally found fossil in the rocks along with the remains of the animal which produced it. So well has it been preserved that in one celebrated instance a naturalist drew the portrait of a fossil squid with the sepia derived from its fossil, but not fossilized ink-bag.
- p363, The standard natural history, Volume 1, John Sterling Kingsley, Friedrich von Hellwald, Elliott Coues, 1884
It was discovered by Dr Buckland that in many specimens of fossil cephalopods, called scientifically Geoteuthis, i.e. Earth Squid, the ink-bag remained in the animal untouched by its long sojourn within the earth, and even retaining its quality of rapid mxiture with water. A drawing was actually made by Sir F. Chantrey, with a portion of "sepia" taken from a fossil species, and the substance proved to be such excellent quality that an artist, to whom the sketch was shown, was desirous of learning the name of the colourman who prepared the tint.
- The illustrated natural history, Volume 3, John George Wood, 1863.
See Dr Buckland's Bridgewater Treatise, The Monthly Review, Volume 3, 1836, for Buckland's original account of the experiment, which was conducted in 1826. He probably got the idea from Elizabeth Philpot - a weathy Lyme Regis fossil collector who befriended the young Mary Anning - who also used the fossil sepia for drawings (see The Dragon Seekers: How an Extraordinary Circle of Fossilists Discovered the Dinosaurs and Paved the Way for Darwin, Christopher McGowan, Da Capo Press, 2002, ISBN 073820673). A similar drawing was done by Henry De la Beche in 1834. See below: it's even captioned "Painted with fossil sepia".

Click to enlarge: image by "Cetae", Photobucket
So, the current news story is less radical than it appears. It's still interesting, but it's a pity that its precursors aren't credited. I've no idea if they were in the original BGS press release.
- Ray