Let's see what I can remember about 1988 and 1989. I'll try and pick up the various threads in one go. Yes, we did pick 4 captains against WI in 1988: Gatting, Emburey, Cowdrey and Gooch. There were actually 5 captains during the summer, as Pringle briefly took over when Gooch was injured in the middle of the 5th test. Curtis and Smith both played towards the end of that series. Smith really started to do well in the following summer, whereas Curtis' default approach of playing straight deliveries through mid-wicket meant he was clueless against Anderman and co. The WI series in 1988 was incredibly frustrating. Under Gatting, we'd become hard to beat and comfortably drew the first test, having lost the previous 10 against those opponents. The official line from the selectors that they believed him when he said he'd none nothing untoward in the team hotel, but they were going to strip him of the captaincy anyway. Thereafter, things went to pieces. The pity was that 0-4 was avoidable, even against WI, who were obviously still very good but not quite an invincible as had been the case a few years earlier. Had Gatting not been replaced, the series would probably have been much closer.
By 1989, yes I think you're right that Dexter originally selected Gatting to captain the team, but that was vetoed by the other selectors. Principally Ossie Wheatley, iirc. Gower and Dexter may well have been kindred spirits, but the latter possibly preferred Gatting's track record as captain. And yes, 1989 was abysmal. Obviously Aus had improved, but the side that Gatting was leading a year or two earlier would never have lost 0-4.
That summer was just a nightmare. Worse than 88, because England were just never in the game.