If Dobbs get demoted to 3rd string odds are big that he will not see the field, wouldn't you rather keep the younger qb that looks like he has more upside? Dobbs will never be very accurate with his throws.
The other thing to take into consideration is where they're at in their contracts. If Rudolph has secured the backup quarterback position and I think Dobbs has one more year left on his contract, are they going to keep Dobbs for one more year and let a guy like Hodges just go?