I don't think it's keeping Milestone outside the core DCU that hurt it, but bringing it to the direct market. Time are tough on new books and new characters these days, and while us old bastard fans all remember the OG, for a whole lot of people they're basically new characters. The YA OGN market seems like a friendlier place.
That said, it's certainly better for sales if Batman can swing around for a visit, so you're probably not wrong either.
And it's also possible that these books are gonna do better in trade (LCS and bookstore). There's been titles like that in recent years; Moon Girl and Ms. Marvel, among others.