I will indulge those that are using the justification for why Michigan's '97 title isn't legit. Lets just say your logic is correct. Then
Nebraska's titles in 1970, 1971, 1994, and 1995 fall under the same reasoning.
Sure you want to die on that hill?
1970
#3 Nebraska (10-0-1) beat #5 LSU (9-2) in the Orange Bowl and were the only undefeated team to finish the season.
#1 Texas (10-0) lost the Cotton Bowl (11-24) to #6 Notre Dame.
#2 Ohio St (9-0) lost the Rose Bowl (17-27) to #12 Stanford.
#4 Tennessee (10-1) SEC champ beat #11 Air Force in the Sugar Bowl.
I support your point in that #1 Texas should have played #2 Ohio St for the Natty.
i.e. With Ohio St
hiding in the Rose Bowl vs a PAC 10 opponent, Nebraska back doored their way to the NC.
1971
#1 Nebraska (12-0) beat #2 Alabama (11-0) 38-6 in the Orange Bowl.
#1 Nebraska had already beaten #3 Oklahoma.
#4 Michigan (11-0)
hid in the Rose bowl and lost to #16 Stanford.
That would have been a legit Natty for Nebraska in either the Bowl Coalition, Bowl Alliance, or BCS.
1994
#1 Nebraska (12-0) beat #3 Miami (10-1) in the Orange Bowl
#2 Penn St (11-0) beat #12 Oregon (9-3) in the Rose Bowl
#4 Colorado had already lost to Nebraska and finished the season AP #3.
I support your point that #1 Nebraska should have played #2 Penn St for the Natty.
However, instead of joining the Bowl Coalition, the Big 10 was (once again)
hiding in the Rose Bowl against a lesser opponent.
1995
#1 Nebraska (11-0) beat #2 Florida (12-0) in the Fiesta Bowl.
#3 Northwestern
hid in the Rose Bowl and lost to #17 USC.
#4 Tennessee (10-1) beat #5 Ohio St in the Citrus Bowl.
#2 Florida had already beaten #4 Tennessee 62-37
That would have been a legit Natty for Nebraska in either the Bowl Coalition, Bowl Alliance, or BCS.
1997
#1 Michigan (11-0) beat #8 Washington St (10 - 1) in the Rose Bowl
#2 Nebraska (12-0) beat #3 Tennessee (11-1) in the Orange Bowl
#4 Florida St (10-1) beat #9 Ohio St (10-2) in the Sugar Bowl
I support your point that #1 Michigan should have played #2 Nebraska for the Natty.
However, instead of joining the Bowl Coalition, the Big 10 was (once again)
hiding in the Rose Bowl against a lesser opponent.
There is a clear pattern of Big 10 teams
hiding in the Rose Bowl against lesser opponents.
1970: #2 Ohio St vs #12 Stanford (loss)
1971: #4 Michigan vs #16 Stanford (loss)
1994: #2 Penn St vs #12 Oregon (win)
1995: #3 Northwestern vs #17 USC (loss)
1997: #1 Michigan vs #8 Washington St (win)
Average Big 10 Rose Bowl opponent ranking: #13
On the other hand....
1970: #3 Nebraska vs #5 LSU (win)
1971: #1 Nebraska vs #2 Alabama (win)
1994: #1 Nebraska vs #3 Miami (win)
1995: #1 Nebraska vs #2 Florida (win)
1997: #2 Nebraska vs #3 Tennessee (win)
Average Nebraska all bowls opponent ranking: #3
That is just for the 5 Nebraska NC's. I'm sure you'd see a similar pattern of the Big 10
hiding in the Rose Bowl for all years regarding NC's pre-CFP.