From the Early Tibet blog, 2007:
As a postscript to this discussion, I couldn’t ignore the much-quoted prophecy attributed to Padmasambhava which also speaks of Buddhism coming to the ‘red-faced men’, often interpreted uncritically as a reference to Native Americans:
When the iron bird flies and horses run on wheels the Tibetan people will be scattered like ants across the face of the world, and the dharma will come to the land of the red-faced man.
I have never seen a reliable reference to the source of this prophecy (presumably it ought to be from a treasure text) and I’d be happy to be put right if anybody is able to point out a source. However, even if there is something like this prophecy in a genuine Tibetan source it should be pointed out that Tibetans would always have understood the phrase ‘red-faced men’ to refer to themselves.
If this scholar has not seen a terma text reference, it probably does not exist; just an oral tradition from recent times.