The only problem with gals like Alexa Bliss, Nikki Cross, Io Shirai,, Xia Li, and a few others is that they are barely 5 feet tall. WWE needs to have ladies that are substantial enough to face off with Charlotte, Raquel Rodriguez, and some other big, strong looking women.
That's why I'm not hot on Cora. She barely looks like she can bench-press a cheeseburger and her moves often show how they rely on her opponent to pull them off.
But that's where booking and wrestling ability/style come in. Asuka's strikes and submissions. Io's flying. Saray's dropkick to the face & exploder suplex. Paige with her RamPage. Smaller wrestlers can look legit if they have the moves which look believable in taking a larger wrestler down. The gauntlet match with the wrestlers focusing on Raquel's knee - stuff like that all play a part.
Being small doesn't mean you can't come off looking like a legit champ - even with the men Mysterio still came across as legit, even going against giants.
But you also have to be booked so that you don't look like you're barely squeaking by your matches. Again, that's booking's fault.
We also don't know if it was the particular crowd. It could be that next week there will be a better reaction. She has been champ since MOTB, and this was the first noticeable negative reaction.
They still have options to make Liv work. Like you said, having her in bed with the ref would make sense, as I don't think anyone can buy the "I only tapped because I thought the ref counted to 3" BS. Maybe turn her into a cheating heel, using the ropes, or maybe use blue mist to play off her tongue thing. Or if they want to keep her babyface, then show her getting stronger/developing in her matches. Try new moves or different styles. Try the underdog story. Nattie might be past her prime but she can still make people look good - maybe give her some rounds with her.
Lots of ways they can still salvage this.