I've always heard this excuse as well, from well before the game was even released (back when Chris Cao would do Q&As on the DCUOSource Forums). However, I believe the truth was eventually revealed to be something altogether different: it was a DC Comics call. They're rather protective of their properties, and the idea that somebody could make Green Fire (as the character Fire does) stepped on the toes of their Iconics. It's the same reason Iconic symbols aren't free to color swap. Now I have no idea if that's still DC Comics' position - or if it's even true. But it is what my swiss-cheese brain remembers.