This was not uncommon in the old days. Displays and connections were of a poor, unreliable quality, making it sometimes hard to "read" a sprite. Colours and shapes could easily get distorted. Just take a look at how much colours could bleed over on Quickman's boomerang for instance, even penetrating solid black lines that were multiple pixels thick.
Using high contrast colours in small sprites makes it easier block off segments of a sprite, and thus easier to interpret. Pink was a nice shade since it is practically on the opposite side of the colour wheel of the green, and stands out enough from the light orange-brown skin tone, The pink was already part of the water splashing and bunny sprites as well, which share Link's palette. Most important of all, the pink also helps Link's head pop on the screen, which is a nice bonus for an action game.
Translating concept art into functional designs for sprites was a pretty key element for artists back in the day. I even recall that this used to be one of Tetsuya Nomura's duties back in his early days. Yoshitaka Amano's art was highly unusable in the state he delivered it, so someone had to be tasked to make his ideas practical and distinct. This usually involves drastic palette changes, minimalising design elements, and accenting other parts. It's how you end up with a green-haired Terra for instance.
To bring it back to Nintendo, Mario underwent several of such palette redesigns too. Mario's blue-on-red palette was decided upon because it provided the most contrast with the black background of the original Donkey Kong game. When it became time to make Super Mario Bros 1 however, they noticed that this may not have been ideal for coloured backdrops, and it would be hard to recycle that palette for other assets due to how much those colours pop. Mario's shirt became brown, and his overalls turned red. His in-game design changed back once more when they were working on Super Mario Bros 2 (USA), by changing the black outlines to dark blue ones. The artwork for SMB2 USA would still be using the inverted colours however, and this wouldn't be fixed until SMB3, which changed Mario's overalls back into black for the in-game sprite.
These changes may seem a little bit silly in 2016, but they had a big impact on the playability of these games back when they were released.