That's a good question, I've thought about that myself. I like your theory too, but I'm not sure if it's correct in this instance for two reasons. Firstly,
Taika Waititi said they used a little known Thor villain called Perrikus as part inspiration for Hela's back story. In the comics he was a powerful and evil Elder God that Odin imprisoned in another dimension and then magically wiped knowledge of his existence because his memory was so traumatic to the Asgardians. That sounds very similar to Hela and why no one in Asgard knew that she existed. Secondly, in the flashback scene where Odin sends in the Valkyries to fight Hela back, they seem to be in another strange looking realm (it certainly doesn't look like Asgard), there are barren looking rocky mountains and a weird dreamy kinda fog:
My personal theory is that Odin trapped Hela in the realm of Hel and his magic meant that she physically couldn't leave that realm (much like the legend that Hela cannot leave Hel if she is separated from her magical cloak in the comics). We know that Hel exists in the MCU (both Thor and Loki refer to it in TDW and AoU) so it's certainly feasible. Maybe she even conquered Hel during her time there and became it's ruler, making her much closer to her comics counterpart. There's also the question of why Odin named her Hela, did he name her after the realm, or was the realm named after her?