The AWA helped create many of the more "colorful" characters of the time, including The Road Warriors, Shawn Michaels, Col DeBeers, etc....and they were playing to large crowds, especially during stadium shows in the mid 1980s, live crowds in the 50,000 range all right in the middle of the wrestling expansion and the two pronged war between Vince McMahon & Jim Crockett Jr.
Like many promoters he didn't see the danger in McMahon's "expansion" into their territories and underestimated the rock style or Sat Morning cartoon style of marketing action figures, posters, etc that McMahon revolutionized in the industry. It's unfair to limit him to "smoky halls where people watched two 40 something guys sit in a headlock for 45 minutes".
Meanwhile, in terms of match quality, 1980s WWE was VERY SLOW, and VERY LIMITED, matches rarely displayed anything outside the most basic of power moves and relied heavily on headlocks, tests of strength, bear hugs, and other time killing spots to stretch time frames into the ten minute realm with such limited arsenals of holds & moves. More talented wrestlers in WWE were often held back in the ring so as not to overshadow Hogan and the growing collection of muscled up or overweight monster types who populated the roster.
You can argue that Match Quality during this time was much higher in the NWA but many NWA stars either started or spent significant time learning from and working for Gagne, including LOD & Flair.
Some of Hulk Hogans best matches were against Nick Bockwinkle in the AWA, comparable if not better than any of his work with Flair & Savage later which is often considered his best in ring product. Likewise, Curt Henning had two of his all time best matches in the AWA against Bockwinkle, and The Rockers were trained and learned the craft directly from Gagne.
