Actually, dragging to the trash made a lot of sense in the context of it's day.
You're on a single floppy drive machine - with no hard disk. You boot off the system disk and Eject it with CMD-E. The system caches the list of files on that disk and spits out the floppy, greys the icon a bit (but it is still clickable and even browsable without the disk in the drive - you just can't execute anything). Then you put in maybe your application disk for MS Word and fire that up, and after it's loaded you again eject with CMD-E. Again, the disk is cached and remains on the desktop.
Now you write up your homework in word and want to save the file. You insert a third disk. Your documents disk. You save the file, but you're done with that disk, so you use the Command "Put Away" CMD-Y to eject the disk and not have it cached to the desktop.
You then want to print your homework out for class, but this requires a read of the system disk, so the system prompts you to pop it back in.
All these disks appeared on your desktop and you could work between them because you had them cached virtually - all one a single floppy system. You only got rid of them when you were actually done with them. Whether or not they were physically in the machine had no bearing on whether or not you were still working with them. I mean, You wouldn't re-eject an already ejected disk would you just to clear the virtual disk off your desktop would you? To clean things up you'd just drag it to the trash - because you were trashing the ghost, not the actual disk. Or alternatively use CMD-Y to put away the ghost which had the same effect.
If you understood what was going on, it made sense in that context.