Why do graduate engineering schools ask for academic reference letters?
I agree that references do not have to be from academics. That seems like an arbitrary restriction, though I can see how it makes sense to have at least one of your letter writers have a background in academia -- after all, you're applying to a university.

Why do admissions committees require letters to begin with? Because graduate school is different from undergraduate. It requires you to show creativity, initiative, independence. Only having good grades in undergraduate is not enough, so the transcript by itself only provides one piece of the picture. In addition, more students have good grades than can be admitted to graduate school -- so admissions committees have to have additional criteria to select from all candidates.