[Bama Hawkeye: Bumped because OSU and UM fans need to realize that there are some very valid reasons for splitting them up]
I am in favor of an East/West split, but I think most people haven't fully considered some of the implications of that setup. Making divisions in that way could lead to some very bad, very plausible outcomes. In the lawyery tradition of this blog, I will take up the role of public defender of the client Mr. Hodgepodge O. Ass and try to frighten you, the members of the jury, into realizing that there are in fact a number reasons why Michigan and Ohio State in separate divisions playing the first week of November might just be the best possible option.
1. One team clinches the division before the season ending game and rests their starters.
No one likes the last few weeks of the NFL regular season. The best teams rest their starters because they already have secured their postseason position. A similar effect could happen with OSU-Michigan. It might not happen immediately, and it might not happen for twenty years, but at some point the coaches will view having their stars potentially injured as too risky when they have they have the CCG next week. All it would take would be one key player getting hurt late in the game when their team has a sizable lead, causing a loss in the CCG. The next year the starters would come out in the second half.
Furthering this point, if the powers that be somehow ever agree to a playoff of conference champions, the team that has clinched the division will have even less incentive to try to win the game. If they win the next week in the conference championship game, that team will be in the playoff regardless of the game's outcome.
2. An OSU-Michigan championship game would be huge
I tend to hold with the sentiment that OSU-Michigan happening in the title game would not be a common event, maybe every 5 years or less. However, if and when it happened, it would an unbelievable event. Imagine the game at a neutral site (which of course means half of each fanbase having to share the stadium) with everything on the line including bragging rights until the next mega-meeting. Added to this volatile mix would all of the bad blood that would be inevitably inspired by the previous game. I would love to attend, if I weren't so terrified of that many OSU and Michigan fans in the same building.
3. Having OSU-Michigan and a CCG back-to-back is a recipe for disaster
OSU-Michigan is always a draining, emotional game regardless of the records of the teams. Having this game followed by a CCG with only a week between will cause one of two results: either the game will become less intense and more of a CCG warmup (see reason 1) or whichever team wins will be so emotionally and physically spent that they will not be able to give their best the next week. An ultra-rivalry game followed by a neutral site loss to a tough opponent because of the hangover would be a miserable way to lose the conference.
4. Fans will care about OSU-Michigan no matter when it occurs (or what sport)
OSU-Michigan permeates through all sports, regardless of scheduling. Evan Turner's buzzer beater was just that much sweeter because it came against Michigan. At every sporting event with a clock, when the announcer says "x minutes remaining" Buckeye fans know to respond "and Michigan still sucks". Even in a sport that is rather lopsided towards one side (like hockey or football), the game still packs an extra punch, usually figuratively but often literally in the case of hockey. If there were an OSU-Michigan tiddly-winks game played in February, it would be the biggest tiddly-winks game of the year. None of this would change if they were in separate divisions or the football game were moved 3 weeks earlier.
5. The regular season game cannot be as big regardless of scheduling of division setups
OSU-Michigan became big in no small part because it was the de facto Rose Bowl play-in game. Even in years that it wasn't usually one team had a shot that the other team was trying to spoil. If they are in the same division, this "winner goes to Pasadena, loser goes home" event can never happen again. There will never be Buckeye (or in theory Wolverine) players celebrating with Roses in their mouths as the other lies devastated unless they meet in the championship game. At best, it goes from a semifinal to an Elite Eight game.
6. An East/West split is competitively imbalanced
Ohio State, Penn State, and Michigan have the three best records in the conference since '93. Putting the three best teams in the conference in the same division leads to a Big XII North situation on the other side.
7. The conference cannot have an equitable balance of cache in the East/West split.
Even if you believe that Wisconsin and Iowa have been on-the-field competitive with Penn State, Ohio State and Michigan (despite their collective 30-45 record against the big three since '93), they simply do not carry the same level of media coverage. As a proxy, just look at attendance. For 2009, the top 3 and 4 of the top 5 would be in the East. ESPN's (admittedly flawed) prestige rankings reach a similar conclusion. The big 3 in the east are all top 11, Wisconsin and Iowa aren't top 25. Want a more colorful data point? SI's Stewart Mandel ran a column where he divided all BCS programs into Kings, Barons, Knights, and Peasants. Ohio State, Michigan and Penn State were all Kings, while Wisconsin was a Baron and Iowa was a Knight.
Imbalanced divisions, especially easily remembered imbalanced divisions, inevitable leads to a "The Good Division" and "The Other Division" national discourse, hurting not only the lesser side but also the conference as a whole ("Sure the Big Ten East is okay, but that's only because they get to beat up on the laggards in the Big Ten West"-ESPN).
8. Penn State/Nebraska isn't a great division basis either
Having Penn State on an island in a West division is unfair to them. Plus, a "Noobs" division just seems uncool.
9. Several great rivalries are not the last game of the season
OU-Texas Florida-Georgia Florida-Tennessee USC-ND Alabama-Tennesee Alabama-LSU Iowa-Iowa City Police
None of these rivalries have their game played last in the season. Most are obviously not on the OSU-Michigan level, but that's unrelated to scheduling. OSU-Michigan is not big simply because it's the last game of the season.