you are conflating two things
one, the sport should absolutely be aligned along coherent and traditional geographic boundaries. Illinois might not be much, but it has a trophy game with Ohio State, along with a hundred years of history. That counts for something when they play and Ohio State wins by 50. Ohio State and Rutgers don't have shit. Oklahoma State is a boring opponent for me personally but at least they make sense in that we're both large state schools in the Southwestern(ish) part of the country.
two, relegation itself is a stupid idea for college football. Arkansas has been bad for "so long"....? Guess what, more people would still prefer to watch them than watch Arkansas State or Houston. That's why the SEC wants Arkansas. The broadcast entities (whether current network and cable TV or future web based providers) can get more eyeballs with Arkansas than Arkansas State or Houston (or Purdue than Ball State, or any other number of relegation-related comparisons we want to make-- I picked Arkansas State and Houston out of geographic convenience to make the point). There's no logical mechanism to force the Big Ten to drop Illinois and add Northern Illinois, even if we're strictly talking about their football programs and not membership in other sports or the (former) CIC.
There also isn't enough volume in G5 to support relegation. For every Boise State, there are two or even three dozen G5 programs that no one wants to watch regularly. You'd basically be creating a relegation system that never needs to be used, or one used to promote too many unattractive programs too frequently.