Correction: They did effectively take it away, even if they "wrote past" it rather than explicitly state it in-universe. So, your "correction" was more an "elucidation." (also, I believe you meant "relegated," not "regulated.")
Semantics aside, yes - I totally agree and it's great that you picked up on that storypoint after all this time and gave it a real explanation.(continuity in a DC book?? Whodathunkit!) "Mosaic" did a good job presenting a non-traditional story, but sometimes to its detriment when it came to existing in a shared universe. If Vertigo were a thing at the time, it could have been a Vertigo title.