A nobleman rises to power as a knight in the First Crusade, proving himself in battle. He is known for being a good military strategist, but he is somewhat despised for his cruelty to his underlings, as well as those he does battle with. He is made fun of behind his back for his gaping, wide eyed expression, and his tendency to lick his lips. Some of the other knights notice his resemblance to certain local wildlife, nickname him the Lizard.
As the Crusaders take over Jerusalem, this knight finds himself in an argument with Baldwin over some major issue or other. He gains the backing of some of the other leaders, more probably because they are playing politics than that anyone actually likes him, and at a weak moment, they depose Baldwin and proclaim this man king of Jerusalem instead.
His reign is short-lived, as he is quite unpopular. Both the locals and many of the crusaders see his rule as illegitimate, referring to him as a tyrant, which quickly morphs into The Tyrant Lizard. When his backers betray him, and Baldwin comes back into power, he is dragged through the streets of Jerusalem and then beheaded, his head being put on a stake outside the gates, with a sign warning those remaining loyal to him that they aren't welcome here. The sign says, The Tyrant Lizard, King of Jerusalem.
The story is embedded into various folk tales and legends, where it becomes shortened simply to The Tyrant Lizard King.