I don't see a problem with paying the market rate for a tier 1 coach...or any coach for that matter. NCAA football is clearly a big business just like the NFL. As long as NCAA football is a business, we should expect to see those kinds of salaries.
To me the problem is that coaches hold too much power with the institutions. They can make demands for institutional changes (or even just significant changes within the athletic department) or negotiate pay increases with any rumor of another team calling. There is little accountability for the coaches that use schools as stepping stones and/or leave programs in a boatload of sanctions. Guys like Pete Carroll and Chip Kelly have nearly unenforceable show cause penalties.
As good as coaches are in the NFL, you seldom see the good ones hold their teams hostage for their demands with the threat of going to another team. In college it's not an even playing field, and the coaches know it.