The system I've always been in favor of for a college football playoff is an eight team format composed of
-The six BCS conference champions
-The two highest-rated mid-major conference champions or independents as determined by an average of the AP and Coaches' polls.
Can't win your conference title? Tough. Two weeks of playoffs in December with home-field advantage, and then the BCS bowls resume as normal (no rematches from the playoffs, though). Here's how the bracket would look at the moment (assuming the favorites win conference championship games).
8. Boston College (ACC)
1. Alabama (SEC)
4. Penn State (Big Ten)
6. Boise State
3. USC (Pac-10)
7. Cincinatti (Big East)
2. Oklahoma (Big XII)
And if the seeds hold, you could still have a Penn State/USC Rose Bowl. There's no reason - well, no good reason, why this system wouldn't work.
Yes, you'd still have the Big XII south controversy, but what everyone is forgetting is how much of a flipping joke the Big XII's tiebreak procedure is. And Ball State is left out, but 9 out of 10 years you won't see three unbeaten mid-majors. And it's not like the Cardinals are a threat to any of the top four teams in this bracket.