There's a much simpler explanation.
The number of proper rectangles formed by the lines on a chessboard is simply the number of non-vertical, non-horizontal diagonals you can draw on a 9x9 grid of dots, each diagonal formed with exactly 2 points.
You have 81 choices for the first point, and 81 - (16+1) choices for the second point, since you can't choose any points in the same row/column of your first chosen point, nor can you choose the first point itself.
Since this method counts each diagonal 4 times, the final count is just 81*64/4 = 1296.
And if you stop by Washington Square Park in NYC, or Harvard Square in Cambridge, you could ask, how many chessboards on a square?
I'll see myself out.