He did mean it. If you take out the race that has one of the highest crime rates (if not the highest, I'm not sure), you lower the overall crime rate. He also meant the part about it being morally despicable to actually do that. Because it is.
I've never seen Bill Benett make any hypocritic nutjob statements in the past. But, I've never really seen a lot about Bill Bennett, so I wouldn't know.