I can't prove anything, of course, because nobody who was there would ever admit to such a thing, but I have what I think is a pretty solid working theory of what happened with the Black Bat and Batman.
What we DO know is that the Black Bat was considered and planned early in 1939, but was put on hold for a while. Then, DC asked Bob Kane to come up with something new, and both Batman and the Black Bat hit the stands within a month of one another.
When DC threatened to sue, Whitney Ellsworth acted as go-between between the companies and brokered the deal, being an old friend and colleague of Ned Pines at Nedor/Standard/etc.
Add in the accepted story of Batman's creation (that Kane came up with a hodge-podge of unworkable ideas which were fixed by Bill Finger), and I think the story falls into place nicely. (But remember, it's only speculation.)
It sounds to me like Ellsworth might have gotten wind of the Black Bat when it was proposed. When Kane submitted his clunker Batman design, editor Ellsworth would have taken the "abandoned" Nedor idea and suggested his favorite elements to Finger, who worked on them with Kane. You'll notice that Batman became MORE like the Black Bat in costume, not less, by the way. Finger added the scalloped gloves, for example, well after the first Batman (and Black Bat) story hit the stands.
Then, when legal action was a distinct possibility, they only guy we know had a foot in both camps smoothed it over, probably by admitting that he screwed up and didn't want to get anybody at either company in trouble.
And yeah, the Black Bat turned out a really good run, lasting to 1954, as I recall, with good sales numbers all the way (I've heard him referred to as "second tier," which is high praise, considering that only really puts him behind the likes of Doc Savage and the Shadow). They're also decent stories, from the few that I've read. Nothing spectacular, but certainly enjoyable.