If Michigan had won that game, no one would expect Ohio State in the National Championship game unless everyone else had 2 losses.
You think Ohio State would be the considered WORST of the 1-loss teams? I think you're over-stating it a bit. They dominated every game they played, all year long, including then-#2 Texas (too bad they got to skip 'Sconsin this year). Even Michigan was playing from behind for the entire game.