Entertainment Weekly talked with Smith today who thinks the decision to end her character did not come from creator Shonda Rhimes, but rather an order that came down from the network. According to a source, the suits "had issues" with both the explicit direction Callica was taking (think: undiscovered country, south of the border, etc.) and, more importantly, with the Hahn character in general.
Exec producer Shonda Rhimes said in a statement:
Brooke Smith was obviously not fired for playing a lesbian. Clearly it's not an issue as we have a lesbian character on the show - Calliope Torres. Sara Ramirez is an incredible comedic and dramatic actress and we wanted to be able to play up her magic. Unfortunately, we did not find that the magic and chemistry with Brooke's character would sustain in the long run. The impact of the Callie/Erica relationship will be felt and played out in a story for Callie. I believe it belittles the relationship to simply replace Erica with 'another lesbian.' If you'll remember, Cristina mourned the loss of Burke for a full season.
Catch Dr. Hahn's last episode this Thursday, who exits the show without an official goodbye, but rather as she just heads out to her car.
Read the full interview here.