Works for me! They should take the conference champions from EVERY conference and then fill out the rest with the top ranked teams until you have 16 teams. Use the existing bowl games to create a playoff system.
Just like the PROs use, lowest plays the highest (just like your chart)!
I think you could use the BCS bowls with at large bids and get a good result w/8 instead of 16 teams. This year, I would make this the bracket. Rose - Ohio State v. Oregon; Fiesta - TX v. Boise State; Sugar - Alabama v. TCU; Orange-Cincinatti v. Georgia Tech, and re-seed after those bowls.
The problem is these aren't pros. They are students and for the most part still kids.
If Boise and Cinci want to be in the top 4 then make sure you play USC, Ohio State or Florida in the regular season.