Yes, I think it was implied that Admiral Leyton recommended (or perhaps ordered) Sisko to take command of DS9. He was close to resigning and needed a kick in the pants to keep his career moving forward.
And he had command experience, having been an executive officer on at least two starships. Having worked with Ambassador Curzon Dax might have suggested Sisko had some diplomatic experience, too, at least in his early career.
I agree with this, and they also needed someone who could be tough because he wasn't dealing with the friendliest and easiest of race relations there. There's also the fact that it was a post that nobody wanted, so it seemed like it was dumped on him. I don't think the Federation expected much success seeing as the station was almost dead when he arrived anyway. I think the only thing the Federation really cared about at that point was the wormhole. I'm sure they had their sympathies for the Bajorans, but I don't think it was a main concern since they weren't a part of the Federation. I always saw it as Sisko and crew taking a situation that could have easily failed (maybe it was supposed to?) and instead they made it the place to be. Weren't Odo and Kira initially not convinced that Sisko was really there to help and that the Fed would be there for the long haul?