Here's Al Roth at Market Design:
"By removing the top two teams from the existing BCS bowls (Rose, Fiesta, Sugar and Orange), the remaining lineup gets unavoidably watered-down. "
Utku Unver and Guillaume Frechette and I wrote a paper which showed that (under earlier versions of the BCS system) the championship games drew enough extra television viewers to make up for the lower viewership in other bowl games that (consequently) had neither the top nor second ranked team playing in them. (See also this interview about the origin of the BCS system (to which I devoted an earlier post).)
So the BCS system may have watered down the rest of the bowl line-up, but in terms of incremental revenue the NCAA is better off with the BCS system.
Cross-posted at Market Power