Real triathlons never allowed drafting on the bike. This "innovation" came not from the athletes but from a bureaucrat named Les MacDonald; at the time of the first olympic triathlon, he had power in the sport and insisted the olympic race be a draft-legal race (or as the triathletes described it scornfully, a "draft-a-thon"). Incidentally, he also planned to have floats in the middle of the water that the swimmers had to climb onto and run across before diving back into the water; fortunately, that one got over-ruled(!).
As to why drafting ruined the sport: in non-drafting races, there is a lot of drama as people with different strengths can battle it out; one person is a strong swimmer and runner, another is a strong cyclist and runner, etc... By contrast, in a draft-a-thon, there is no reason to bike hard, as you will just pull a lot of wheel-suckers behind you, who will then be able to start the run on fresher legs. Therefore, the bike leg is a boring not-particularly-fast group ride; and this, in turn, makes the swim fairly unimportant and boring (as long as a swimmer is good enough to come out of the water with the big pack, there's no reason to swim faster; although a really slow swimmer misses the draft pack on the bike, so likely has no chance in the race). Finally, everyone in the big pack gets off the bike at nearly the same time and, to their credit, the triathletes run pretty hard. But, of course, they are not as fast as *really* good runners would be.
The result is a race where nothing much of interest happens until the run, when a bunch of pretty good runners also start out at about the same time. This is so much less interesting for the athletes and for the spectators than is a real triathlon -- and that's why triathletes oppose drafting.