Have never heard about this, but anything is possible. Lots of people were considered for various roles at different times, and almost any actor in the right range for a role would have been submitted by his agent. If I had to guess, I'd say Hatch was more likely considered for the Sheridan role between S1 and S2 than for Sinclair. Whatever the exact circumstances of Michael O'Hare's departure, it seems clear to me that once the opportunity of recasting the station commander's role came along, Warner Bros. was probably pushing for more of a "name" actor. JMS has already mentioned that both Robert Foxworth (who had both genre credits and feature film experience, and who reportedly had a pretty decent "Q" rating) and James Earl Jones were seriously considered for the part. Hatch could certainly been among those considered. However, this doesn't mean that he literally auditioned for a role. Actors and agents are sounded out on ideas before an actor actually comes in and reads for a part, and the whole thing often falls apart at the talking stage. (The actor isn't interested in the material, or is asking too much money, or has just committed to another project.) Such conversations often get reported as "so and so auditioned" for a part when all that really happened was a few phone calls, and maybe a lunch.
Regards,
Joe