I actually agree with you on most of this! I think the big reason that PSU and the other NE schools weren't absorbed by the ACC is that for many years, they considered themselves a southern league. The original 8 (or at least right before FSU was admitted) were UMD, UVA, UNC, NCST, Duke, Wake, Clemson, and GT, correct? Very southern flavor there. UMD being the only school that would be considered Northern (and weren't they much more Southern back in the '80's?). It seems to me that the ACC took pride in that culture and heritage. PSU/Rutgers/'Cuse really didn't fit that culture.
A league of the above (either yours or Dandy's) would have been a great league!
As far as ND goes, I completely agree they don't fit The Big10 mold. They were chased for one reason, money. I actually think Delany has stopped chasing that whale, and had so for quite a while now.
The large flagship (or flagship like) schools are important due to the fact is you graduate several thousand new fans every semester. Alumni makeup the most loyal part of your fan base (and the biggest donors as well). It doesn't make the league better, but it does make it more stable, in my opinion. Would The Big10 take on a smaller private school? If the situation was right, of course! If it made them money. JHU made the Big10 money and gave legitimacy to their lacrosse programs and better spring content for The BTN. It's a small, private school that brought the number up to 6 (the magical number for an automatic bid in to the NCAA championships). I wouldn't be surprised if a small private (or semi-private) school were brought in for hockey, if it had an elite program.