It turns out that the rumor mill was right! Cassandra Clare announced on her Tumblr that Kevin Zegers will indeed be playing Alec Lightwood in The Mortal Instruments: City of Bones!

Cassandra said that Kevin was originally offered Alec, but things got a bit tricky in the process:
Kevin was actually one of the first actors approached to play Alec but his schedule didn’t work with the filming originally so they went with someone else; then the scheduling changed once again and it didn’t work for Alec Mark Two, but did work for Kevin. Such are the vagaries of casting.
Kevin is best known for his roles in Transamerica, Dawn of the Dead, and The Jane Austen Book Club. In 2006, he won the Chopard Trophy at the Cannes Film Festival for Male Revelation (essentially Best Male Newcomer).
What stood out for the filmmakers was Kevin’s take on Alec in his audition, Clare said:
One of the things I really liked about Kevin was that one of Alec’s audition scenes was the scene where Alec shouts at Clary in City of Bones and tells her she endangered Jace’s life. And a lot of the actors who auditioned played it yelling and really mean so you just thought, boy, Alec. What a jerk that guy is. Kevin played it with a quiet sort of intensity that grew through the scene so you could see through the cracks of the anger and think: wow, this guy is really scared and vulnerable. Because that is the Alec people love.