The only ways to replenish talent over time in a dynasty league are:
a) draft good rookies
b) fleece people with trades
or
c) be lucky on grabbing the best waiver pickups
The second options is unreliable, and the third option only works well if your team is down in the standings (or you use blind bidding for free agents AND are sharper than your rivals). So in short, the rookie draft is essential.
That said, you don't have to gain your value from it by actually drafting rookies. You can also build and sustain a dynasty by making effective trades of high perceived-value picks for established players. Best way to use the rook draft is the same as anything else...try to maximize your return on investment, whether by holding or dealing each asset.