Obviously time will tell whether it was a mistake switching or not. Like you, I believe Bonneville may have left money on the table by giving up on KBSG to protect their news-talk brand.
They've had a big success with moving WTOP to an FM station in Washington D.C., but the Seattle/Tacoma listening market is not the same as DC, nor was it the same situation. From what I understand, the FM stick used to simulcast WTOP originally with success was a bit of a "rim-shot" to the area, not an established full market Class C-FM. Taking a struggling rim-shot for experimentation makes sense, as that way you aren't discarding an established oldies brand, and the revenue associated with it. However, as my grandfather once said, there is no reward without risk, and I'm sure Bonneville has looked at all the angles from a long-term strategic perspective before they decided to make the change.