Selection of a VP is always a compromise, to appease rival factions. Bush was not Reagan, and Reagan knew it. So I wouldn't say Reagan made a mistake in selecting Bush, it was what had to be done at the time because of politics.
He could have dumped him in 1984...Bush was against his tax cuts..
The bigger question could be, why, in 1988, did the Republican party voters pick Bush 41 in the primaries???
Yes, Bush was in position to run for president because of being Reagan’s VP, but it’s not like it was an automatic process. Bush 41 was running in the primaries against a number of others, and he won that process. Why did GOP voters then pick Bush to succeed Reagan?????