They did it for things like ices because raspberry juice is actually clear or pale red at best. People would think red was cherry flavored so they used blue.
Did people not know this? They sit right next to each other on the shelf. I've found that typically when a cheap liquor is very obnoxiously colored, it's going to be made with food dye, vs a product that's more expensive will use specific tricks in the industry to get the color right. A good example is Empress Gin. The color comes from pea flowers and will even change color when you add acid. And even though it's very bright in color, it's still nowhere near as electric blue as blue curacao.
Cointreau or Grand Marnier are the higher quality orange liquors I'd substitute for blue Curaçao, since they don't need to be sweetened like something dry