How do we know that the powers that be know? From what i can tell they are no more knowledgable about who are the subjects of prophecy than anybody else. That's what makes it a prophecy. They merely backed the most likey candidate.
anyway, I'm not saying the shan shu is not about Angel. In my reading of the entire series, i argue, that by the end, Angel does not believe that he is the guy of the prohecy. I'll explain my thinking:
The Powers that Be, at some point notice Angel - remorseful and eating rats in the sewers and allyways in New York. They think Aha! there is a prophecy about a vampire with a soul, lets help this chap out and get him working for us. So they send Whistler to give him a prod into action. Then he starts to help Buffy and she has to send him to hell etc...
Ok, so then the First Evil brings Angel back from hell, supposedly so he can do its bidding. He won't do it and would rather die. The PTB are happy that their Vampire shows a bit of spunk and determination, so they make it snow and Angel is saved and so is able to move to LA and start exploring his destiny. He of course, finds out about the shanshu and it becomes something of a burden to him. It confuses the boundaries of why he wants to be a hero. is it for redemption or the promise of a reward at the end? Over seasons 2,3 and 4 angel's belief in the prohecy wavers but it is still a symbol of hope for him. When they get to W&H his level of hope is pretty low and in fact, he tells Spike that the prophecy is rubbish and that he dosen't believe in it, but at the end of Numero Cinco he is seen reading the prophecy, showing us that he still has a measure of hope left. That there is a purpose to everything.
Then, throughout the rest of the series, that hope is gradually erroded.
In Destiny we are hit between the eyes with the fact that there are now two vampires with soul. Angel and Spike have their truely excellent fight with each arguing as to why they are better than the other. Spike wins the fake cup - which means nothing except that it starts Angel doubting himself.
In Soul Purpose, the dreams are not just angel’s worst fears, they are also prophetic. They foreshadow Fred's death, the loss of Buffy's trust, angel's loss of purpose and the importance of Spike. We see Angel without shoes (sans shoes = no shanshu) while we know previously Spike has dreamt of 'drowning in footwear'. Not to mention that this episode seems to be loosely based on Shakespeare's Henry IV part one with Angel taking the roll of Henry IV and Spike playing Prince Hal, his son. Eventually, prince Hal becomes Henry V, a warrior greater than his father. Food for thought indeed.
Why We Fight - i've explained my reading earlier.
In Smile Time, Angel is a puppet. Literally. The metaphor could not be clearer. He has been a puppet to his calling, to the powers that be, to wolfram and hart and yes, to the Shan Shu prophecy.
By A Hole in the World he is readily admitting that Spike is also a Champion - a thing he has previously been loath to admit.
In Underneath Spike is welcomed to the team - Wolfram and Hart and the Senior Partners are now interested in Spike, the other Vampire with a soul
In Origin, Angel is confronted with a prophecy that he can't fulfil, that only his son can. The text is Connor and Angel but the Subtext is Spike and Angel. A prophecy only his son can fulfil. Vail says 'But don't worry. Your boy is very brave. I'm sure he'll do you proud' the words resonate with double meaning.
Then we come to Timebomb - an amazing episode in which Angel makes his decision about what to do. in this episode Angel is out of phase with time (as he is out of phase with his purpose), Connor has his memories back and the need for them to be at W&H has gone. On top of that Spike and Wes conspire together over Illyria and Angel is excluded.
Angel and Illyria have the following exchange:
ANGEL
Illyria, the future can change here. You can choose a different path.
ILLYRIA
and be nothing.
ANGEL
And be what you are.
Fighting to hold on to what you were... it's destroying you.
And he hears his own words (invert the conversation) - It doesn’t matter if he's not destined to be the 'One' - he can be what he is and still be a hero and champion which leads to the plan to escape W&H and bring down the black thorn....
Ironically, this letting go of the ShanShu and the need for a reward may be exactly the thing that will allow him to gain it in the long run....
I don't particularly care which of them gets it, Angel would probably like to be human better than Spike, who has maintained many links to humanity anyway. All i'm saying is that by the end of season 5, Angel dosen't think he's the guy and that is why he is able to sign it away so easily, his discussion with Harmony is wistful and sad, every ounce of hope he had for the prophecy and being human again is gone and he doesn't tell Spike about it before the final battle because Angel knows what a burden it has been for him and so is loath to burden his heir apparent with it too.