Denise, Yes. There is an enormous "but" involved, however, and Matthews doesn't dispute it. You can see it spoken about briefly if you pay attention to the video that you reference and not simply the text which is selectively quoted below.
That is, that the segment quoted by the Breitbart blog excludes the important part of the story. Why Matthews would call the snippet that was left in a "redemptive moment" is more or less beyond me, since I didn't find it particularly endearing, while I think the whole story is something else indeed, and involved her getting re-involved and going to bat for the guy and getting his problem solved and also history about the murder of Ms. Sherrod's own father in the sixties, and her ability to rise above this stuff.
I don't think the Obama administration came off particularly well, here, though it's trying to recover. Breitbart comes off far worse.
Whether you and I would or should agree on opinions is an open question. As Daniel Patrick Moynahan is supposed to have said, "Everyone's entitled to his own opinion; everyone's not entitled to his own facts." I should look that up to get the wording down, because I find that a remarkable statement.
About opinions, I'm open to discussion. About facts, I want citations and scholarship. We tend to find out more about our facts all the time, at least in some fields, so I like to keep up.