hey bono=genius,
You're right, it's what you see in R&H.
It happened in November of 1987 here in San Francisco. On a week day U2 did a surprise free show at Justin Herman Plaza (downtown SF) and Bono spray painted "rock n roll stops the traffic" on the Vaillencourt Fountain (located one one end of the Plaza). This is shown in Rattle & Hum taking place during All Along the Watchtower which they opened with but, in reality, it happened toward the end of the show.
Some people got pissed, Mayor Feinstein got involved and they were going to charge him with vandalism or something but I heard that U2 made a big donation to some local groups, Bono apologized and they ended up dropping the charges. At the subsequent shows in Oakland, U2 brought out the artist who created the fountain and ended up spray painting their own JT backdrop.
As this is not the most beautiful fountain, a lot of people thought this was an improvement but, alas, they removed the paint and the fountain still stands (although because of budget issues it hasn't had water in it for years).
Also, this was pre-1989 earthquake so the plaza was adjacent to a freeway (during the concert, cars were stopped and people were watching). After the earthquake damaged the freeway it was torn down so the area looks different than it did in R&H (a big improvement as there's a gorgeous view of the bay which is just across the street from the plaza).
Anyway, there's a long explanation from someone lucky enough to have been there (thanks to my cutting a philosophy class).
ps. I work a few blocks from there now and one day as I was walking to my office I saw that someone had written 'Rock N Roll Stops the Traffic Bono 1987' in the cement across the street from my building. It looks old so I think a fan did it after the free show! Always makes me happy to see this!