Like all effects, it depends on how it’s done. There’s a lot of well-done rear projection in old movies, and even front-projection (in films like 2001, which isn’t as old as what you have in mind. A lot of effects work in King Kong was done via rear-projection and innovations like Miniature Rear Projection.
What’s that? You didn’t know there was projection in 2001, or that some of those scenes in KK were rear-projected? You didn’t notice it – it wasn’t badly done.
I think you’re objecting to the badly-done stuff, and assuming that you can spot all the cases of it.
2001 front projection. Betcha thought they shot this outdoors
Miniature rear projection in King Kong:
http://www.criticalcommons.org/Members/pcote/clips/king-kong-miniature-rear-projection.mov/view