Indeed, I say as much at the end.

But what should Intel have done? They needed a CPU that can run 8080 code but with more memory. Also it's the year ~1980 and we're limited to the technology of the age.

A system with 64k sized windows seems unavoidable.

If you extend the size of the address registers, 8080 code will only run in the first 64k, or require some kind of current window register.

An 8080 mode might have worked but that would have been expensive.