Is there anything wrong with creating a very large log file?
There is nothing wrong with setting the initial log size to 70GB, if you need that large of a transaction log.  There is a problem, however, with it set to grow in 10MB increments.  Such a small increment of growth can result in numerous VLFs (Virtual Log Files) which can result in long recovery of the database during startup and lengthen restore times.

You are correct that the log file consumes the disk space regardless of how much data is actually in the log.  Backing up the transaction log does not decrease the size of the file.  Either the file was initially created that large, or it grew to that size over time, or because of a large insert operation or something.  If it grew to that size over time, you should run DBCC LOGINFO and see how many VLFs you have.  If you have thousands, then you will want to fix that by following the steps lined out here: http://support.microsoft.com/kb/2455009