In Liz Phair's "Stratford-on-Guy," which I heard this afternoon, she describes herself "pretending to be in a Galaxie 500 video." Is that the most obscure band mentioned in a song by a major artist? I can think of the Mugwumps geting name-checked by the Mamas and the Papas in "Creeque Alley," and then there's the line in They Might Be Giants' "Twisting" that goes: "She doesn't have to have her Young Fresh Fellows tape back."
More often, though, you get things like Mott the Hoople with their Beatles and their Stones, as well as T. Rex, who show up in the Who's "You Better You Bet" as well. It would have been cooler if they'd given a shout-out to Desmond Dekker or the Casinos or somebody like that.