It's just speculation, but once the John Doe I & II sketches were published, the liklihood that it was not an attack by Mid East terrorists became rather high.
Once McVeigh was identified, and his prior history known, the finger of suspicion pointed directly at the so-called "right-wing militia groups".
From a political standpoint, this development was golden for a sitting president who had become "irrelevant" in the wake of the Republican tidal wave in the Congress just sworn in that January.
Once the blame could be credibly attached to the right-wing, it was no longer necessary to investigate or seek other possible culprits. The Clinton administration and the Reno Justice Department had the scenario they needed.
That the scenario may have been subsequently found to be only partially correct would rate as a.) irrelevant and b.) mildly embarrassing, therefore c.) not worth pursuing.
It is difficult to imagine any administration taking such a devious and duplicitous approach to such an important event. But, if anybody could, the Clinton administration could.
I find this explanation very logical.
Yeah, I do too. A lot of people try to claim much more (e.g., outright FBI complicity, etc.), but I think your theory is more probable. The order to stop investigating the Iraqi angle came straight from the top, right after Bill Clinton found out the FBI had a genuine, "right-wing nutcase" in custody. I'm sure Clinton viewed it as a heaven-sent gift.
Although there may have been a few corrupt feds in on it (a necessary prerequisite for being hired in the Clinton Administration), my theory is that the rest of the agents involved had to decide if they were going to shut their mouths or end up like Terrance Yeakey, Gordon Martin, Ken Griffin, Dr. H. Don Chumley, Mike Loudenslager, et al. We can sit here and spout off about how that's no excuse, but that's easy for Keyboard Cowboys to say. Just my 2 cents.