LOL, why not let Division II schools in. Under that system, Middle Tennessee State is 7-5 and a CONFERENCE CHAMP! Those Conference Champ Blue Raiders lost to Oaklahoma by 59-0! Your Conference Champ only rule would eliminate 5 of the top 10 teams in the country.
By allowing ONLY conference champions, you ensure that all teams play to their best abilities every week. Win it, and you're in it. Lose it, you go to a bowl.