This story is complete BS.
Hispanic is a culture, not a race.
Most Hispanics ARE white, and like whites from other cultures over the past centuries, they integrate into the mainstream culture quite well within a generation or two (and many times the immigrants themselves do it - none of this waiting until their are kids or grandkids born here).
My wife is from Mexico, and is thus Hispanic. Technically, my kids are counted as Hispanic, since they are 50% Hispanic (though born here). My wife is so white that she pretty much glows in the dark - when we lose electricity, I have her pull her pants down so that I can find the flashlight (well, not really, but we joke about it). She became a citizen in 2005, after being here for 6 years. She is so integrated into the mainstream culture that she has told me that the only reason she would ever go back to Mexico is to see family and tourism.
The census bureau records Hispanic/Latino in a separate category from race and states that Hispanic/Latino can be of any race.