A 75% stock/25% bond portfolio has higher expected returns and less volatility than a 75% stock/25% cash portfolio. This is true because the bonds normally grow faster than cash and they act as a better hedge against stocks than cash.
I'm not sure that bonds will grow faster than cash in a rising rate environment. The past decades bonds have extraordinarily profited from declining interest rates, so I'm not sure how much we can extrapolate their behavior into the future.
I think you are overestimating the impact rising rates have on bond returns.
When interest rates go up the rates on newly issued bonds go up, and those tend to be higher than cash. I can't really imagine a scenario where banks would pay higher interest on deposit accounts than the rate on prevailing bonds.* Existing bonds take a hit in the short term as they are repriced with the new rates, but you still keep getting your income payments and as those bonds mature you get to replace them with new bonds with higher rates. Rising interest rates are normally a good thing for bonds long term.
A fund like VBTLX has a duration of 5.7 years. One way to look at that is that if rates rose 1% that fund might see roughly a 5.7% drop in principle, but you keep getting income. Now as the short term bonds in VBTLX mature(at PAR by the way) it goes and buys those newer bonds at higher rates. Over the long term those higher rates more than make up for the short term drop in market value. Studies have shown that if you plan on owning a bond fund longer than its duration, in this case 5.7 years, you actually benefit from rising rates. So if you own something like VBTLX and you plan to keep owning it you should welcome interest rates rising. If you do plan on owning bonds for a shorter period of time... switch to shorter term bonds. VBIRX has a duration of 2.7 years.
*The one scenario I can see cash earning more than bonds is in a negative interest rate environment. Bonds as we have seen can go negative. Banks are hesitant to charge depositors interest for their money because the customers can just take the cash out. Banks are more likely to keep deposit interest rates at 0%, and then charge other fees like overdraft fees, ATM fees, teller fees, etc. to cover the difference.