Hopefully the answer here isn't so simple as “that's just how it was done back then”, but given that Backlund had held the title forever, wouldn't Hogan vs. Backlund have been a much bigger match and a much better way to pass the torch?

Followup: if this was “just the way things were done”, what changed six years later to make Hogan vs. Warrior happen instead of jobbing Hogan to say, Rick Rude or Perfect to set up Warrior's title win? Wouldn't old time wrestling booking practice be to cheat Hogan out of the title so he stays basically unsullied and then Warrior crushes the dastardly heel at WM6?

With the Hogan win, they needed to accomplish two things:  

1.  Screw the all American white meat babyface out of the title via epic shenangians and put it on someone who no one could possibly cheer.

2.  Have Hogan win the title and completely crush some goober. 

Hence, the Iron Sheik.  They could not have booked the start of Hulk's reign any better.

As for Hogan-Warrior, they actually did that scenario with Sgt. Slaughter in 1991 to get it back on Hogan.  With the Warrior win, they were trying something else. And it failed because the show didn't draw like they were expecting and Warrior never got going as a top guy.  So yeah, in retrospect it was a pretty bad idea.