I didn't get involved until the late 1980's, by which point rookie card mania was in full swing. My understanding of the phenomenon was that it was late 70's or early 80's when it really began to hit. I too went through the excitement then let down when I realized that RC's of players like Jose Canseco, Wally Joyner, and Gregg Jeffries were NOT going to pay for my college education.
Here is a more high level summary of my understanding of how these types of things worked in the evolution of the hobby:
*1960's and earlier - the hobby is in it's infancy. Monetary value not really ascribed to cards. Collectors trade with each other through the mail and in rare personal visits. Card condition much less of an issue, the focus is on completing sets and having a card at all.
*1970's - the hobby becomes more organized, but still has a very amateur flavor. Star cards for vintage (then just called "old" cards) first take a rise above the rest, but to a limited extent. If a common card was 10 cents, a Mantle or Willie Mays might be worth 75 cents or a dollar. Geez, I was born too late...
*Late 70's - early 1980's - the growing hobby becomes more professional - first national shows, first recognized price guides. This I would guess is when "rookie card mania" really sets in. People start to look at Joe C's and Ron Kittle's as investment cards. Oy.
*1990's and beyond - well, what you still see today. The hobby continues to evolve. RC's are perhaps more understood in terms of risk. Although now in the 2000's you have deliberate scarcities and that kind of thing.
I think the RC designation will always play a part in the hobby. Clearly has it's ups and downs.