What did Universities use in lectures before they starting using PowerPoint?
I can go back to 1989, when I enrolled at the university (engineering). The first two years were mostly devoted to mathematics, physics, chemistry and circuit theory. No overheads were employed in those courses, just plain old blackboard. There was just a course on Fortran and Pascal where the professor probably employed overheads, but I skipped all the lectures so, well, I'm not sure about that.

Overheads really started to appear from the third year on, mainly for engineering courses about algorithms, digital circuits or solid state physics (alas, these were abysmal). Lecturers would deposit a printed copy of the handouts at a local photocopy shop, so that everyone could buy a copy. Certain courses had packs of around 1000 handouts, and frequently the handouts were not available till the end of the course. Luckily, most of the courses about analogue circuits, advanced electromagnetics and quantum physics were still delivered through the blackboard. 

It is worth recalling that at the time "overhead transitions" were implemented by means of patches and adhesive tapes. When printed, these "effects" would leave black marks of various shapes on the handouts.

Overheads were typically in full colours when handwritten, but the handouts were of course black and white, and writings in lighter colours were barely readable. Program listings were instead printed with black and white printers: no syntax colouring at the time.

Edit: I've just found under a pile of papers one of those packs of handouts. Here is how one of the pages looked like (two overheads per page; the pack is dated 1987):



The first overhead, on the left, is the text of an exercise ("Design a circuit with three inputs x,y,z [...]"), the overhead on the right is part of the solution. You might notice that on the upper right corner of the left overhead there are two page numbers: probably the overheads had been renumbered along the years.