if you've 'elevated' your viewing to real fighting then don't transfer your expectations to pro-wrestling. pro-wrestling is drama, it's a performance, not a fight. the entire point of it is to suspend disbelief, the only thing that determines who can be a 'champion' in pro-wrestling is the ability of the person to perform, and whether the person is 'good for business' in terms of marketability.
RAW ratings have increased pretty dramatically since the emphasis shifted from Cena as the standalone face to Daniel Bryan. people like him, and he can put on a far better match than anyone bigger than him (not counting CM Punk). there are big guys who fit the juicehead stereotype on the roster who are great wrestlers, but no-one can hold a torch to Daniel Bryan at the moment. he's the right guy at the right time, whether he would win an MMA fight is as important to his popularity as whether he has a bigger dick than Randy Orton, or whether he's as good at Trivial Pursuit as HHH.
Vince McMahon is not an idiot. he made a horrible mistake in his initial estimation of CM Punk and he's not ashamed to admit it now, he's not ashamed to use it as an angle, just watch Punks DVD. hell, the entire storyline in the WWE at the moment is a SATIRE of the fact Vince McMahon used to think only big guys could get over and carry the company. do you think he would allow himself to be mocked like that? no, he's behind this story, he's poking fun at himself, and how internet fans see him. its his decision to push Daniel Bryan and it's done nothing so far but increase business and refresh what was becoming a particularly stale product, so one guy thinking D-Bry isn't believable because MMA exists is of no concern to anyone really.