Take Ohio State next year. They play absolutely no one OOC, and should be able to coast into a BCS game if not the championship itself before being tested. Still, the conference will be collecting the same money. The B1G as a whole will get more prestigious bowl invites as well.
It's ALL about money to Jim Delaney. By having less non-conference games, it becomes less apparent to the rubes in the stands that their team is not as good as many of the MAC schools ( I specifically refer to the Little 9 here), and also less obvious that the best teams in the league can't compare to the top programs nationally.
It is unquestionably a short-sighted move that will hurt the B1G brand in the long run - the recruiting hit you mention will be big, but it is the thinking of PTB's of the B1G.