Cults were a very high-profile thing at the time, and no one really had much expertise on them. Remember that Pulling's son killed himself only four years after Jim Jones Kool-Aided his cult to death in Guyana. Heaven's Gate hadn't yet killed themselves but they were active in the late 80s and they weren't the only kooky cult going on.
Add to it the subcultures popping up all over the place that appropriated macabre imagery (a ton of very successful NWOBHM bands, for example), New Age movements denouncing the "restrictive" tenets of Christianity, as well as magazines and newspapers spreading rumors in order to sell copies, and it was simply a matter of there being so much bullshit flying around that most people wouldn't really tell what was really going on. It was the perfect environment for a moral panic.
This is why America needed its own secular version of the Inquisition to look into this shit. The FBI should have been ideal, but they proved to be inadequate. I'm not calling for people to be burnt at the stake, but we do need an organization that can look into these subcultures and movements and understand them from a perspective not tarnished by unstable, emotional zealots.
But on topic, the Inquisition, aside from rooting out heresy, had the task of understanding whatever the heretical or deviant cults were up to, or what they believed in. They were sent out to try and understand the difference between Waldensians and Cathars, or Lutherans and Calvinists. After all, to defeat your enemy, you must know them, not just the way they act in public, but their beliefs, their culture, and dare I say it, their art and ethos.
A thorough investigation into the D&D phenomenon would have revealed that it was just a harmless board game played by bored nerds who have little else to do in the era before video games. A similarly thorough investigation could have revealed the truth about Jim Jones and his cult before they committed involuntary euthanasia with poisoned Kool-Aid. They could have also revealed the truth about these New Age movements and subcultures to the public, showing what they believed, the kind of culture and art they partake of in their communities, and why they're not that big a deal or that much of a threat. Most of their leaders are babbling fools with some shred of ancient knowledge that they took to a different direction, and the majority of their followers are bored idiots who were tired of the same Sunday School stuff that WASPs usually undertook.
In short, the situation before the moral panic of the 80s required people who can think with a clear head and understand those who thought differently than they did, just as the Inquisition in the Middle Ages and the Renaissance had to understand the different heresies of their day and what the difference was between one group and another. Why is it that modern man, who has access to far better technology and who should know better from the examples of history, ends up having less understanding of those who think differently from him as opposed to Inquisitors who lived and died 400-700 years ago?
