Rico Beard on 97.1 was talking about this exact scenario today on the Ticket. Because of strength of schedule, Penn State would actually go to the Big Ten Championship from the East Division, as of last weeks records.
I think Caleb Williams is doing the right thing here and all players should be demanding the same. Teams should be functioning as either public-owned (like the Green Bay Packers) or worker-owned cooperatives and not money making machines for billionaire owners. Caleb Williams has every right to demand control over the means of production for the team he played for.