Was that actually a story they told though? I honestly can't recall. I thought the story was more around why character builder v1 was late / missing features / buggy, and that they pretty quickly swept under the rug the bullsh*t pixie-dust full suite of magical unicorn tools (basically admitting it was vaporware). i.e., I thought the loss of a team member was (accurately?) being blamed for a setback in character builder itself (only).
But I'm old and have bad memory, so who knows. Anyway....
Heh, you and me both

So, short of going and digging back into wayback land, which I'm not really inclined to trouble myself to do, I don't actually know in detail. I do know that the things they DISCUSSED implied at the very least that there would be some sort of online play capability, and the eventual VTT was perceived as an attempt to fill that promise. They certainly talked about 3D character models and some stuff like that (but how exactly they were going to be used I'm not sure). It LOOKS to me, from various discussions about what the D&D team told Hasbro, that they at least had an AMBITION to do something that would rival 'MMOs'. They may well not have really clearly known what exactly that was, and you may be right in thinking that their explanation was only MEANT to apply to the CB.
OTOH, the CB wasn't especially late, the offline CB came out pretty quickly after the game was released. I don't recall the exact timing, but it was not that long, and it was actually a pretty solid offering (albeit only usable on PC desktop, but also was usable offline, sort of a plus/minus situation). I think it is likely that the actual program produced is rather less filled with bells and whistles than was dreamed of, but it is a good solid application that people are still using!
So, it SEEMS like the things that WotC really was telling a story about was the more 'advanced' stuff like a VTT (maybe 3D etc, nobody knows for sure) etc. Anyway, I never either believed the "crazy guy tragedy" story, nor really thought WotC earned much blame here. They imagined something well beyond that capabilities, but you get noplace if you don't dream, and what WAS provided was pretty good quality.
So as a professional UX designer, I'll say that while better design isn't free it doesn't have to be expensive. More than anything else it would require a mindset shift from the developers / companies that build VTTs. ("You [developer] are not your user." -- design for the people who actually use your product)
But as you've implied, maybe they are happy enough with their outcomes, and maybe the market of people-willing-to-put-up-with-bad-U.I.-because-it's-still-a-VTT-woohoo! is a good enough market.
Perhaps. I think they COULD maybe do better. I'm not sure if the failure to do so is purely a resource issue or also an organizational failing. UX can be a pretty tough nut to crack. I once worked with a woman who was offered the job of head of UX experience by Microsoft! She told me even they were pretty inept on that front (this was about 20 years back, things are likely pretty different there now). Anyway, having run small software shops, I don't really fault them too much, though I have complained here and there about Roll20. We can hope they improve with time.