dear MCH -
i always thought that too. the doctor just let go. always wondered WHY.
no, not usually. but when was the olde doc ever a usual TIme Lord? still, another Time Lord (Cho-Je/K'Anpo) got doc #4 going so i always figured it completed his cycle thus closing the circle by a future self doing the very same thing. [very mid-east mysticism here.
and i never put that particular 2 and 2 together, but being (or having been) the #5 doc, The Watcher would know what this particular doctor was to prefer. and i can see the doctor's particualr sense of humor coming forth in The Watcher laying out his clothes for him.
though many fans did not like the story, i thought it was a very fitting and proper end to TOM's era.
Seeing Doctor #5 in Tom's big coat, scarf and hat was really amusing.
yes. too bad they got the boots/shoe thing wrong. AND not to forget ... he unravelled The Scarf! the callous wretch!