No, it was not used because there is too much blue already (France, sweden, Muenster, which tends to be big quite often).
About the prussian blue and holocaust: first, it's hardly a well known fact.
Secondly, it's associated with holocaust because there was NOT traces of prussian blue on the walls of gas chambers, and there should be some (I really don't feel strong enough in chemistry to try to explain it.). The holocaust deniers used it as their proof. And there really should be, and, as later reserch proved, there in fact was (the first sampling was too big, they took a big chunk of brick, whereas PB was only within the frst 10 microns of the wall. Since the examination shown unsignificant percentage of PB).
Third, it's a bit more commonly associated with holocaust because a neo-nazi band used it as their name.