The only problem is that, over time, the best coaches and the best players (and thus, the winning programs), will all be concentrated to a smaller number of large blue blood programs with the alumni support to pay the players the most. It will not take long for the concentration of resources (players, coaches, and therefore, wins) to all become centrally located to about 30 programs. I would predict one to two recruiting cycles.
Take away the one-time transfer rule and require kids to sit out a year if they change schools, and most of the problems go away. That's the killer with regards to competitive balance IMO.