Is the Michael Jackson skin pigmentation disease realistic?
1) Is this plausible?


It is absolutely plausible. His particular condition was called Vitiligo
 (as stated in your quote) and isn't that uncommon, albeit not usually as severe.

Skin pigmentation expression changes over time, sometimes dramatically.


  2) Is it likely to be an actual disease, or would there be so many mitigating factors that it is unlikely a person would suffer to the extent he did?


Vitiligo is a very well-documented disease, and like every disease, there's a broad range of affectation. Treatments options are very limited, and so makeup or other methods are often used to disguise the affected skin.

Here's some more pictures of people with Vitiligo at varying stages: