As an Iowa fan, I can't say that I want to see NW in Kinnick every other year, but I think that is the most heated rivalry Iowa has outside of the divisions I listed. With those divisions, Iowa would play all their natural rivalries every year (I just don't see Illinois as a rivalry, despite the proximity). You really could switch around any of the non-OSU, UM, NU, PSU rivalries and be good. MSU-Indy could make for an interesting basketball pairing. Would you believe in that division alignment, Wisconsin does not have a winning record against any of it's yearly opponents?

I recommend a North-South split (permanent rivals across):
North - South
NU - PSU
Iowa - NW
Miny - Indy
UM - OSU
Wisky - Illi
MSU - Purdue

I think that allows for the maintenance of a lot of rivalry games except MSU-PSU (does anyone care?), gives the divisions balance, makes the divisions easily recognizable (anyone know what divisions each ACC team is in?), and doesn't do too much damage to travel or other sports.