One problem with this theory that ASCII killed off octal is that ASCII was introduced in 1963, while octal was popular into the mid-1970s. The real reason that hex beat octal is 16-bit words. It's trivial to break a 16-bit word into two bytes with hex, but it's a mess in octal.
To make this concrete, suppose we have the bytes 1, 2, 3, 4 in 16-bit memory. In hex, this is 0102 0304. In octal, this is 000402 001404. Hex makes it trivial to see the bytes, extract them, byte-swap, etc. In octal, you need to sit down and think. I've worked on a 16-bit octal machine (Xerox Alto) and after about 2 minutes it's obvious why hex won.
To make this concrete, suppose we have the bytes 1, 2, 3, 4 in 16-bit memory. In hex, this is 0102 0304. In octal, this is 000402 001404. Hex makes it trivial to see the bytes, extract them, byte-swap, etc. In octal, you need to sit down and think. I've worked on a 16-bit octal machine (Xerox Alto) and after about 2 minutes it's obvious why hex won.