Disse di aver rifiutato la sua proposta.

English Translation

She is said to have refused his proposal.

Should this not be “She said she had refused his proposal”?

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I think you’re right here. Also I read “proposal” as “offer”. Perhaps “Si dice che abbia rifiutato…” would be closer to “She is said to have…”.

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I tend to agree.
However, I do not know whether there is a difference between “Disse di …” and “Disse che …”. The only occassion where I encountered the “di” is “DIsse di si / di no”.

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For info: I see there’s also a use of “dire di” meaning to tell someone to do something: this site has the sentence “Gli dissi di lasciare la stanza” - “I told him to leave the room”. But that doesn’t really help with our example here.

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