She denied accurate quotes from her book were in there, and launched a coordinated attack on two women of colour who had respectfully drawn attention to them
That line about 'coordinated attack on two [three] women of colour' isn't true. She attacked a young white woman teacher who had reviewed her book on Goodreads and had condemned it as racist. And that attack was pretty cringeworthy. But once Twitter took her to task (Monisha Rajesh, Chimene Suleyman, Sunny Singh and others), she apologised. She never attacked women of colour.
Rajesh/Suleyman/Singh have said that they received racist hate mail as a result of the way they criticised Clanchy on Twitter, and that's deplorable, but it's a HUGE leap to say that Clanchy herself was somehow responsible for those attacks.
I was following the whole messy saga on Twitter very closely, and it strikes me as utterly unjust the way that Clanchy's unconscious bias in her book (which she did eventually apologise for) was equated with the awful racist messages Rajesh, Suleyman and Singh received behind the scenes from internet trolls.
I believe those three women when they say they were targeted by racists, but on Twitter, I never saw them receiving hate, I saw them receiving a huge amount of support.
I did see tweets telling Clanchy she should commit suicide because she's such an awful person.
Clanchy appealed for people to come out and say her book wasn't racist, and that move backfired spectacularly, but I haven't seen a single tweet of hers criticising women of colour. On the contrary, she apologised to women of colour.
I agree with you, OP. Picador ceasing to publish all her books, not just the book at the centre of the controversy, is complete overkill. Ironically, one of the books they've 'cancelled' is compilation of poems by the refugee pupils Clanchy taught.
This kind of intolerance and virtue-signalling is not making the world a better place.