Would a washing machine cause the orange ink to wash away from the paper without dulling the "United States of America" or "We the People" lettering? Is the ink that prints the lettering on the bill more resilient than the ink they use to dye the bill orange? My initial instinct was that the bill was "faded", hence the paper being white rather than orange, but the undamaged condition of the lettering is what caused me to question that.
In a word, yes. Enzyme-based detergents in particular can make certain banknote inks change colours, while leaving other colours intact. Enzyme detergents are by far the biggest cause of fake "wrong-coloured serial number errors" that I've seen here in Australia.
Let's look at your note this way. This note is quite well-worn, lots of creases and folds. That means hundreds of people must have used it. When it was fresh and clean, without all the distracting damage, then the "error", if it had existed then, would have been even more prominent. If it had looked "odd" right from the start, I doubt people would have kept spending it - someone would have pulled it out to keep, or a bank would have noticed it, seen it was "defective" and returned it for destruction.
But they didn't. So, logically, the note wasn't "defective" back then.
Don't say "infinitely" when you mean "very"; otherwise, you'll have no word left when you want to talk about something really infinite. - C. S. Lewis