This is about depth and potential, as with some of the other rumoured signings. Smith made the comment early in his stay that he was surprised we didn't have many players in the squad coming into their prime (I think he said 24-26 or similar). Coming from Aus he'd probably be stunned that our first reserves in some positions are 17 years old. Maybe he thinks that with work Hooley could be a quality fullback? I'm happy to trust his judgement given I don't disagree with any of the players who have left since Smith arrived (except maybe Broadbent, which seems to be more down to the player).
Injuries or not Smith clearly saw enough of Walker to want to move him on, and he'd be at Hull permanently if he hadn't got hurt again. If Walker recovers it will probably be him that spends the season on loan.