"Rumours of a wonderful farm . . . continued to circulate in vague and distorted forms." How true are these rumors? Is the farm really wonderful? Link this to the perception of Soviet Russia certain members of the lower classes entertained.

The rumors of a wonderful life on Animal Farm circulate to the animals on other farms. At this point, although everything is not perfect, we are told life really is very good for the animals who have chased away Mr. Jones:

The animals were happy as they had never conceived it possible to be. Every mouthful of food was an acute positive pleasure, now that it was truly their own food, produced by themselves and for themselves, not doled out to them by a grudging master. With the worthless parasitical human beings gone, there was more for everyone to eat. There was more leisure too

So, although it will all go wrong, at this point the rumors are largely true. The animals on other farms are inspired and learn the words to the "Beasts of England" song. The neighboring human farm owners are angry about the rumors and flog any animal caught singing "Beasts of England."
In real history, many working-class people in other countries heard the news of the Russian Revolution happily and were excited at its initial success. Many working-class people and communists in other countries were inspired by the Russian Revolution before it, like Animal Farm, devolved into a terrible tyranny.