Ostrander & Yale specifically created Oracle with Barbara Gordon in mind.

Ashley Mavis Powell debuted in Manhunter #5, which introduced the character Sylvia Kandry, a police officer, in the records division. Mark Shaw hits on Sylvia and makes a date with her. On the date, he asks for her help to access police records to help locate Powell, who is a wanted child molester, who skipped bail. Shaw is being stonewalled and Sylvia reveals that the NYPD had a good case, but the judge set the bail below the DA's recommendation and she made bail and fled. Sylvia tries to access the records, after she is chewed out by her boss, after she makes a collar, thanks to the help of Manhunter. Manhunter gives her credit and her reprot shows her acting alone; but, the lieutenant knows she met Shaw the day before and puts 2 and 2 together. Sylvia is ticked off enough at the treatment that a malecolleague would not receive, after a collar and goes digging in the records. She finds them restricted and hacks through the security block, bringing up Powell's name. She is interrupted by Paula Darrow, a civilian encoder, and her files go missing. She puts it together with Powell and uses an indeti-kit to adjust Powell's photo, that Shaw gave her and establishes a match with Darrow.

Powell is there to establish Sylvia as a good cop and computer hacker. Kim Yale was sole writer on this issue and she makes a point of showing how Sylvia has to deal with a load of sexist crap from male colleagues and superiors. She proves herself tough and smart and stops Powell, with Manhunter's aid. It gets her in further trouble, but doesn't cost her her badge. Yale was establishing Sylvia, who joins the supporting cast, as an info conduit and love interest for Mark Shaw.

Powell is brought back, after she escapes from prison during the Invasion, which takes place "off camera." Issue 10 reveals she had been incarcerated at Belle Rieve, but was never shown to be there, in Suicide Squad. That series was busy with the Senator Cray blackmail problem and, though they appear in Invasion #2 and 3, only issue #23 actually featured events from the Invasion. manhunter, however, was directly tied into things. Powell is brought back as a plot device to help get Mark Shaw info to be where he needed to be. Then, he double crosses her. He promises to look the other way, so she can disappear and re-establish herself elsewhere. She agrees, aids him then goes to leave and is met outside by the FBI. Shaw tells her he did not promise to notify other law enforcement, then also tells her that even ex-cons have standards and child molesters are well below.

So, no, I don't believe Powell was ever intended to be part of Suicide Squad. She was never shown in that book; but, other people that Manhunter caught were, such as Captain Cold and Count Vertigo. I believe she was mainly a plot engine; first to bring Manhunter and Sylvia together, then to help create a link to take Manhunter to Jeremiah Heep, a former employee of Southern Cross Salvage (who is Shaw's client), who located an alien battle mecha, from the Invasion, and is offering it to the highest bidder. Shaw uses Powell to manipulate the bidding, online, in his favor, to meet with Heep, so that he can reclaim the mecha, for SCS, but he also has to deel with rivals from the Yakuza, Maj Zastrow (of the Red Shadows and the KGB), a couple of mercs with a LexCopr battlesuit, and a Checkmate Knight.

The fact that she was specifically identified as a child molester, in her debut, meant that she was not likely to be used for something like Oracle, who is acting on the side of angels. Ostrander & Yale were too smart to think that they would be able to write a complex character who is a sex offender and try to redeem them, in any way fashionable. In reality, most sex offenders were also victims of offense and their targets are usually of the age when they were molested. It doesn't excuse what they do as adults, but it is at the heart of their offending. It was hard enough presenting a character as both an offender and possibly sympathetic, in the excellent Prime Suspect series (series 4, episode 1 "The Lost Child") when a released sex offender becomes the prime suspect in the kidnapping of an infant. The episode has DCI Jane Tennison meeting with the therapist who treated the suspect and gets insight into the perpetrator of the crime. He doesn't believe her suspect is capable, since he fixated on older children. The episode showcases a lot of elements related to child sex offenses, from the perpetrators to victims, including a police officer, who is very aggressive towards the suspect, who is eventually revealed to be a survivor of abuse, as a child. The case is too personal for him and his aggressive actions leads the suspect into barricading himself in his girlfriend's house, with her two daughters. The suspect is proven innocent and eventually comes out, without harming the kids. It is a very layered drama that really did its research; but, compare that to regular police dramas, movies, tv and similar things, like comic books. "Child sex offender" or "child molester" are trigger words that create immediate anger and disgust in most viewers/readers. The bulk are going to leave it at that and take down the criminal. Good writers will try to give some nuance; but, most won't go to the lengths that writer Paul Billing did, in Prime Suspect. So, there is no way that Yale and Ostrander intended for a character who they labeled a child molester at the start, to be used as a supporting character. DC wouldn't have it and comic fandom probably would have reacted negatively. Powell was there to be caught in the first appearance, then to be tricked by Shaw to aid him and be double-crossed, to demonstrate his character depth.

No, Oracle was always going to be Babs. It also helps that Barbara Kesel was the editor on Manhunter. I'm relatively certain she was on the same page with Kim Yale, in regards to how Barbara was treated, in Killing Joke and the desire to make her into a new hero, with or without disability. John always gave credit to Kim for wanting to do something about Barbara.