Yes, that's correct. The WB's primary advertising market was suburban white girls. Casting black talent did not advance their revenue, nor could black actresses be used for in show modeling. The only business reason to cast black actors was CYA. If Jesse Jackson or Al Sharpton called for a WB boycott, advertisers may have gotten skittish. Hiring some black actors was the cost of doing business, an protection scheme, if you will. Now, there may be artistic or moral reasons for hiring and promoting black talent, but let's clear, a chat with Rev. Al didn't make their hearts grow three sizes.
I do think the character was hurt in the transition from urban warrior to another guy living in Angel's hotel, and that they really didn't have enough use for the character to justify full time status, kind of what happened with Lorne.