Eliezer, I think you have dissolved one of the most persistent and venerable mysteries: "How is it that even the smartest people can make such stupid mistakes".

Michael Shermer wrote about that in "Why People Believe Weird Things: Pseudoscience, Superstition, and Other Confusions of Our Time". In the question of smart people believing weird things, he essentially describes the same process as that Eliezer experienced: once smart people decide to believe a weird thing for whatever reason, it's much harder to to convince them that their beliefs are flawed because they are that much better at poking holes in counterarguments.