I was in Philly then, and knew several of the principals on the officialdom side. I agree with your version. I also knew folks in that section of the City. Certainly no one wants their house burned down, but it’s worth noting that the City provided brand new houses, and also appointed a black Police Commissioner after this disaster to help heal the public’s concerns.
And the new houses were far inferior to what the city burned down. They were plagued with problems. The city and the residents were still fighting it out 20 years later. The incompetence of the city government caused the problem in the first place, and the incompetence of the city government prolonged the problem for decades afterwards.