A very famous incident is always mentioned regarding the virtues of using miswak.
In a certain battle the Muslims were suffering some loss. So the leader pondered over the matter and came to the conclusion that this great sunnah was being left out. He then commanded the army to use the miswak. When the enemy saw this, they became afraid and fled thinking that the Muslims are sharpening their teeth to eat them.
Is this a true story? If yes then in which battle did it take place and who was the leader?
I have not come across a narration like this.
Some non Hadith books mention this incident as happening to ‘Abdullah ibn Mubarak (rahimahullah). However there is no chain of narrators mentioned.
Imam Tabari (rahimahullah) has recorded an incident in his Tarikh which is quite different from the one in question. Here is a summary of that incident:
Rustum An Najaf had sent a spy to spy on the Muslims. The spy had seen the Muslims using the miswak for every Salah. When this spy returned, Rustum asked him “What do they eat?” He replied: ” I have not seen them eat anything except that they suck on a stick in the morning, evening and when they sleep”.
(Tarikh Tabari, vol. 4 pg. 358)
This narration does not have any mention of the Muslims losing in the battle etc. However it is the closest possible story I could locate to the one posed in the question.
And Allah Ta’ala Knows best.