This Wikipedia article says that "in a pig's eye" is rhyming slang for "lie", but I'm not convinced. The article also claims "in a pig's bottom" exists as a variant - but I doubt that's ever had any meaningful level of currency, which is another reason I don't much trust the author.
There might be some element of alliteration (also with "Pigs might fly"), but it doesn't seem like the kind of rhyming slang I'm familiar with.
Can anyone either substantiate the Wikipedia article, or give a more convincing etymology?
EDIT: Soddit - the Wikipedia page lacks citations anyway, so I just changed it.