Withdrawing to the Rhine would have been an unmitigated disaster for the Germans and particularly their leader, not the superior defensive position you envision. The retreat would have been harried by the superior Allied air force and the Germans would still have lost a lot of their armor and field pieces. As others have pointed out, the Allies had the ability to cross the Rhine. It wasn't easy but it could be done, even under fire. And by retreating the Germans would have lost the very, very valuable Rhineland.

And then there are the political ramifications that you have to consider. By retreating to the Rhine and taking up a purely defensive position after willingly giving up sovereign German territory Hitler would have lost the confidence of the German people and particularly the German generals. It would be a tacit admission of ultimate defeat and you would have seen mass desertions of German units, disaffection amongst the populace, and likely renewed attempts from General Staffers to oust Hitler. I would not in the slightest bit be surprised in this scenario if the Remagen bridge incident wasn't repeated but with German citizens welcoming in the Allies to avoid having their Rhine town be made into battlefields, especially when it was obvious that even Hitler believed the war was lost.

I think one of the greatest problems people have in understanding Hitler and his military decisions is forgetting that he was also the supreme political leader of Germany. Never forget the political ramifications of military actions if you want to understand why he did what he did.