Why would the ARU care about making the games competitive? All the games against the franchises will be close to, if not, sold out long in advance of weakened teams being in known. By feeding the second string lambs to the Lions they aren't giving the Lions any help in getting battle hardened and they are getting their pay day from ticket sales. Its win win for the ARU at the moment.
Also releasing fringe Wallabies who most of the media whingers have probably never heard of won't stop them bleating on about it. If you asked Clive Woodward about Dave Dennis he'd probably comment something along the lines of "solid goal kicker needs to improve his tackling though." The media circus that follows England around at World Cups unfortunately follows the Lions too and until mandatory IQ tests are introduced I think we'll be stuck with them for a long time.