It does look good when it's set out like that, doesn't it?
If I could set it up the way I wanted it, there would be eight teams in the playoff, namely eight conference champions. Eight conferences of nine teams apiece, each of which plays a full round-robin schedule. (Notre Dame would finally have to join a conference or be left out.) Seeding would be based at least somewhat on how good your out-of-conference scheduling is.
Realistically, I think I'd like to see six teams in the playoff, with two teams getting a bye into the next round. Or maybe 10 teams. Whatever you do, I think you have to make any at-large teams serve as wild card teams, playing an extra round. OSU and Michigan would still have been meaningful this year if the loser had to play an extra round against LSU, while the winner got a bye week and got to start off against Wake.