Is it true that if you KILL a bee or a wasp, that on death it emits a
chemical of some kind that attracts other bees to swarm the area?

Hello again, jhabley!

I believe you are thinking of the "alarm pheromone" in social insects,
a chemical danger-signal that attracts other insects of the same
species to come to the defense of the hive or nest. Bees, wasps, and
ants are capable of emitting this type of pheromone.

"A bee gets stuck in your hair or clothing:
This may happen quite by accident, probably because you have broken
another rule of etiquette, such as not dressing properly for the job
or standing in their flight path. Immediately and steadily back away
from the hives, without swatting at the bee, screaming, convulsing, or
otherwise freaking out. When you are away from the hives, kill the bee
by slapping it soundly. Kill the bee before it escapes from your hair
or clothing, as it will likely sting you when it is free. Discard the
dead bee outside the apiary and apply smoke liberally to the area on
your body where the bee was killed. Smoking the area will mask the
alarm pheromone secreted when the bee was crushed."

BeeCare: Apiary Etiquette
http://www.beecare.com/Apiary/Etiquette/Apiary%20Etiquette%20-%20Rule%2012.htm 

"Worker bees will guard the entrance to the nest from intruders.
Unlike wasps, bees can only sting once. This is because their stings
are attached to their intestines, and have barbs on them which get
caught in their victim. As the bee pulls away the sting is left still
pumping its venom while the bee, damaged by the attack, is left to
die. Like wasps, the bee's venom contains an alarm pheromone which
stimulates other bees to attack."

BBC: Honey Bee
http://www.bbc.co.uk/nature/wildfacts/factfiles/425.shtml

"I tend to think that every bee counts, so I try very hard to avoid
crushing any bees when replacing the excluder, super or cover board...
Dead bees may still release an alarm scent the next time you open the
hive, which is a good reason to try and avoid killing them!

...When squashed, the poor bee emits a strong alarm pheromone which
will only cause others to rise to the attack."

Beekeeping the Natural Way: The Smoker
http://www.geocities.com/RainForest/Vines/9167/smoker.htm

"If a bee or wasp flies near you, stand still or move away slowly.
Rapid movement often provokes attack. Do not crush a bee or wasp. An
'alarm pheromone' can be released into the air, causing nearby wasps
to attack."

A to Z Wellness Center: Take the Sting out of Summer
http://atoz.iqhealth.com/Atoz/healthupdate/alert06172004.html

"Never squash a Yellowjacket wasp near the nest. A dying yellowjacket
releases an alarm pheromone, or smell, that alerts other wasps. In
less than 15 seconds, yellowjackets within a 15-foot radius will come
to the victim's aid."

Ivy Hall School: Wasp Facts
http://www.ivyhall.district96.k12.il.us/4th/kkhp/1insects/waspfax.html 

"A crushed ant will emit an alarm pheromone that in high concentration
sends other ants nearby into an attack frenzy, and in lower
concentration attracts them."

wordIQ: Ant
http://www.wordiq.com/definition/Ant

Google search strategy:

Google Web Search: "alarm pheromone" + "bee OR wasp"
://www.google.com/search?hl=en&ie=UTF-8&q=%22alarm+pheromone%22+bee+OR+wasp

I hope this helps! Let me know if anything is unclear, and I'll get
back to you as soon as I can.

Best wishes,
Pink

Thanks! :)  (I lost the bet.)

This information may be helpful to you.

European wasp
http://www.betterhealth.vic.gov.au/bhcv2/bhcarticles.nsf/pages/European_wasp?OpenDocument

Symptoms of a wasp sting
Unlike a bee, that can only sting once (and leaves the stinger behind
in the skin), the European wasp can sting repeatedly. It emits a scent
chemical (pheromone) that alerts other European wasps to attack. The
sting of a European wasp has certain features, including:

Physical characteristics of the European wasp
The characteristics of the European wasp include:

Looks similar in size and shape to a bee
Around 15mm in length (a Queen is about 20mm long)
Bright yellow body with triangle-shaped markings
Two long antennae
The wings are folded when when at rest.

What is the best way to kill an entire bee's nest?

Psychopoet,

If you have a hive of honeybees, the best thing to do is call a
beekeeper (almost every town has beekeepers in the vicinity).
Beekeepers are usually delighted to come and remove groups of bees and
their dwelling-place without harming the bees. Relocating the bees
rather than killing them is better for everyone (especially the bees).
You don't pollute the world with nasty pesticides, and you don't
destroy some of nature's most beneficial creatures.

Thanks Pink

SFU half an hour away!

In the UK, police stations keep a rota of "on-call" bee keepers to
deal with swarms.

Ian G.