You have to keep in mind that the arcade flyers were designed to sell games to distributors and operators, not the players. The industry magazines were not generally available to the public and players never saw loose arcade flyers during this time. You would have to work at one of the distributors or attend one of the trade shows (with the booth babes), but again, that was not the general public.

The players only saw the cabinet art and the attract mode (and shoulder surfing other players) when making the decision to play or not.

It is not surprising that the "sex sells" attitude that was common in the 70s for selling sport cars and luxury items would find its way into arcade sales. Think about the kind of guys who had purchasing power in that era, mostly old men chomping on cigars.

Granted, this kind of thing did find its way into home console advertising in the later 80s and 90s.