Why not? I already stated that I'm running a defensive team and I believe that I can stop most setups. I can risk getting setup on as I still have other ways to defend against other threats. Also, I stated in my original post that it is not the best choice to typically setup on Wobba but it is the situation and the flow of the match that determine your moves.
I do agree with you that it is not ideal to setup rocks against wobba but everything is dictated by how the match is being played.
The problem with that of course is that Wobbuffet is still alive and pretty well.
As you said, the best way to deal with Wobbuffet is to cut your losses -
make sure that Wobbuffet can only kill one pokemon at most. In the scenario above, not only do you lose Hippowdon to a Pursuit revenge kill (of course, if they don't have a Pursuiter or don't Tickle, this situation is moot) but you've failed to inflict significant damage to it...and since you run a defensive team (and I don't know your team, but in general, Wobbuffet can switch in easily on such teams), Wobbuffet has more chances to wreak havoc.
Contrast it with simply EQing it 6-7 times while it sets up.
Damage: 15.55% - 18.43% after Tickle #1
Damage: 11.90% - 13.82% after Tickle #2
Damage: 9.60% - 11.32% after Tickle #3
Damage: 8.06% - 9.40%
Damage: 6.91% - 8.25%
Damage: 6.14% - 7.29%
Worst case scenario, against a 0/252 Positive Nature Wobbuffet with Leftovers, by simply attacking while Tickles, you do over 50% damage to it. And with so many hits, there is a reasonable chance you get bailed out with a CH, either against Wobbuffet or against the switchin.
(of course, Wobbuffet probably shouldn't be Tickling 6 times knowing that it's not getting Leftovers recovery but then again, Hippowdon has a chance of surviving Pursuit on the switch with anything less than 6 if it's not max atk Adamant CBTar (even SDef oriented CBTar needs 6 Tickles to guarantee the OHKO)
Even if you can keep Stealth Rock out on the field, because your team is defensive, there are many situations where I could bring in Wobbuffet easily, and even in a weakened condition take out another one of your walls.
If you would provide a counter-example where Stealth Rock would indeed be the best move against a lead Wobbuffet, detail it, but for right now, I honestly can't see it. Note however, we're talking about the first exchange of the match - that is what your inital example of Hippowdon v.s Wobbuffet pertains to - as you said, everything is dictated by how the match is being played. The most important thing to consider is whether the potential Pursuiter/revenge-killer is out of play. If yes, then it actually becomes the more viable option to set up, because that immediately forces Wobbuffet out, and since your team can deal with most setups, that works to your advantage.
(If the revenge-killer
is still in play, the only point where setting up is viable is in a predictive sense - you have an offensive threat like Garchomp against a full-health Wobbuffet that you know can take your hit and Counter; in that scenario, it could be a great option to Swords Dance in Wobbuffet's face, hit with a boosted Outrage or Earthquake and present a massive threat to the rest of the team.)
