I'm aware of that, but I don't think that changes things much. They chose to call it "entertainment," when they could have called it any number of things. But at the time they had been under increasing criticism of the matches being fixed, etc.
Nope, not even close. Even if we are pretend that all wrestling fans were completely unaware that the WWF was scripted, that ended in Montreal in 1997 when Vince McMahon forced the belt off of Brett Hart. He didn't change the name of the company until 2002. Even before that, Vince declared it was all a work because he was tired of being under the thumb of various athletic and boxing commissions. His people did steroids and he wasn't going to stop them.
WWF officially broke kayfabe 1989 way before the name change because they didn't want to spend the money necessary for live sporting events. Before that pro wrestling was regulated just like boxing or MMA, with state commissioners and taxes and medical requirements.