The match happened and it flopped. Backlund was leary of a double-cross and called Vince Sr., who assumed him that Flair, Crockett wouldn't try anything. Flair got wind of it before the match and was Backlund's new best friend according to Backlund's book.
I think that they did have a whole match worked out and planned and all of a sudden Backlund didn't trust Flair because somebody got in his ear. Flair then heard about it and got really upset because he knew that Backlund could make him look very bad at least and injure him at worst. So neither trusted the other going in. It's funny, because I don't remember people worrying about Harley double-crossing in any of the title vs title matches he had with Superstar Graham or even with Backlund at MSG. And I don't remember Harley ever worrying about it either because he could take care of himself.
I don't believe any of the double cross worry stuff.Flair said the match was not that good and the fans didn't care because the WWF meant nothing in Atlanta. as for whether it was filmed. who knows. no one thought Buzz and Tommy Rich was filmed until the WWE went through all the unlabeled footage they had.lol
The card drew just under ten thousands fans, which was better than average at the time. So it wasn't a bust, sure the fans live might not have loved it. For Flair and Backlund who were used to working hot programs may have been underwhelmed by the reaction of fans.
The problem, as it almost always is with title vs. title matches, is that nobody expects a clear winner. That puts the wrestlers at a disadvantage from the start. I would think it would be particularly hard to build a story that engaged the fans. The "Battle for Supremacy" angle doesn't work since nobody is going to be a clear cut winner.