I heard that if a dog bonds with the kitten than it can produce milk is that true?
No, the dog will not produce milk unless they have had puppies. Your kitten may have been taken from its mother too early, which could be why she's behaving this way. If it doesn't bother your dog then it shouldn't be an issue. She will likely grow out of this behavior as she gets older. My 2 kittens used to suck on blankets in the same sort of way, but stopped as they grew up. Your kitten probably craves comfort and safety from your dog - very cute!
No that’s not true. Baby animals are constantly hungry and always looking for food since they are growing. The kitten just feels safe and comfortable with your dog and is trying to suckle because a nipple is there. The kitten isn’t getting milk, just hungry and looking for food.