Saying that Illinois will likely be more powerful than Penn State is like saying Kansas State will be more powerful than Oklahoma. It just isn't going to happen. One season? Maybe, but nothing more.
I don't think its unreasonable to account for power shifts. College football is a dynamic sport and schools are constantly moving up and down the pecking order. I didn't mean to imply that the Illini would surpass PSU anytime soon but it's always possible. Something as simple as a coaching change can make everything different. Look no further than PSU itself...before Jo Pa the Nittany Lions were nothing to write home about...same with FSU and Bowden. On the flip-side of that you can see plenty of powerful programs that have fallen from past glory...Miss, Miami, A & M etc...
Going way out on a limb and drawing conf. lines on such temporary standings when we have a more obvious geographic division to work with just seems like a bad idea to me.
I think it's not being based so much on current power as it is historical power. Penn St., OSU, Michigan and Nebraska are all in the top ten winningest college football teams of all time. I think putting three of them in one division could be a mistake. And yes teams are constantly going up and down in power, but I think these schools with their traditions and higher expectations are more likely to rebound quickly. Having to play Penn St. and Iowa every year will definitely be more challenging then playing in the Big 12 north.