Hitler was fighting a war with, for the most part, countries larger than his own. Italy didn't help out his cause much, and Japan probably harmed the war effort, if anything, by bombing the United States and "waking up the sleeping giant." Really, it couldn't have been expected that he was going to win, especially after the United States and Russia joined in the war. The problems faced in Germany weren't due to Hitler, it was simply that Hitler lost the war. Hannibal (who is in the game) lost the war against Rome, and yet, he was a good leader. Many of Carthage's citizens were then turned to slaves and all sorts of other harm was brought to the country by the Roman soldiers, but this wasn't Hannibal's fault - it was the Roman's, just like Germany's problem was Russia's fault, not Hitler's. I mean, obviously the extermination of the Jewish population was Hitler's fault, and that probably didn't help the economy much, but otherwise he didn't do anything, as far as I know, to harm the economy by himself. Napoleon (who is in the game), too, ultimately lost the Napoleonic Wars, but again, that didn't make him a terrible leader. I'm sure there are other leaders in the game who had a weakened empire after a war, but none immediately come to mind (and I have to get going somewhere). So no, the empire being left off in better hands than it was started in is not necessarily a criteria for the inclusion of a Civilization IV leader.
By the way, I'm not trying to defend Hitler - I'm just trying to defend certain historical points or other aspects as to why people suspect Hitler is not in the game. I think that he is not in the game for other reasons than our sometimes stated, so I am simply expressing my opinion. I'm hoping that everyone can respect my opinion as I respect their own.