When the deal went down was also the time that Duggan had just got popped for drugs and was fired so he was looking to get in with JCP but they felt his drug deal got too much mainstream coverage and they declined him.
I dug DiBiase the babyface personally in that time period because he was still an aggressive worker and there was always the threat he would break out the black glove when needed. Compare DiBiase the babyface in 1986 to DiBiase the babyface in 1981 and then you will see boring.
Also regarding Flair and his insecurity of course he and I'm sure all the major players in JCP didn't want UWF to be perceived as their equals.