I agree it doesn't make sense. Another example where features get implemented over time without a coherent plan.
I would advocate:
1. Add support for an /etc/hosts.allow and .deny files that allow the user to specify telnet, rsh, and so on specifically. These files would override hosts.equiv and telnet.hosts.
2. Deprecate the telnet.hosts option, but continue to honor it for at least a year. Post big warning messages on all releases telling people it's going away. Then yank the option entirely.
3. Retain hosts.equiv as an rsh-only file only for tradition, but have the other files override it.
Bruce