There are a lot of ways to measure that conclusion, but the easiest way would probably be with national championships. In the past 20 years, Michigan, Ohio State, and Notre Dame, the three marquee programs in the Midwest, each have one national title. In that same period, no team from the Northeast has won a national title. Moreover, Michigan won its title without playing anyone from the South and Notre Dame and Ohio State both benefited from bad calls against Miami. ND beat Miami in '88 in part because of a dreadful fumble call against Miami at the one-yard line; Ohio State had the dodgy interference call in overtime, although OSU was also screwed at the end of regulation on a pass that would have ended the game, so I'm more sympathetic to them. Just about any national champion can be marginalized by pointing to luck factors, but the point is that Notre Dame and Ohio State had no margin for error in their games against Miami. The Midwest hasn't produced a truly dominant champion in recent memory. '88 Notre Dame, '97 Michigan, and '02 Ohio State aren't going to be part of the "what was the best team in the past 20 years?" conversation.
In contrast to the three national titles for the Midwest and Northeast in the past 20 years, here are the totals for the South, West, and Plains:
Miami - four
Florida State - two
Florida - two
Alabama - one
LSU - one
Georgia Tech - one
Tennessee - one
Texas - one
USC - two
Washington - one
Great Plains: five
Nebraska - three
Colorado - one
Oklahoma - one
There is inevitably some imprecision involved in making determinations as to what region a given program falls. One argument could be that Nebraska is really in the Midwest and that doubles the region's totals. However, even if that's true, Nebraska illustrates the point that Southern teams typically have significantly more talent than teams from the Midwest and therefore, that teams with less talent can only win with an unconventional style. Nebraska was one of the few teams that truly scared SEC fans, as they had an impeccable record against the SEC during their option era. Nebraska realized long ago that they couldn't compete with other programs on a talent-for-talent basis, so they had an innovative option offense to compensate. (They forgot this when they hired Bill Callahan, which is why they'll never be anything more than a decent program from now on.) Michigan and Ohio State might take heed of that example. They'll always have more talent than the Iowas and Wisconsins of the world and if they're satisfied with winning the conference and losing their bowl games, that's cool. To beat USC or Florida (or whatever team from the SEC vanquishes Florida), they can't be conventional. I am at a loss in terms of figuring out how they should be unconventional. Ohio State's shotgun offense seems all racy (especially to Michigan fans), but it's not unconventional in the modern college football world. And Michigan and Notre Dame's pro style offenses are certainly not unconventional in any respects.
Even if you drop the eight national titles from the three Florida programs out and exclude Texas from the South, the South still beats the Midwest in national titles in the past 20 years. The overall conclusion, to me at least, is that Michigan and Notre Dame fans overrate the value of their schools' profile and tradition. (I exempt Ohio State from that discussion because Ohio State, unlike Michigan and Notre Dame, can simply recruit their state and have a very good team. It won't be as good as Florida or USC because Ohioans probably overrate their high school football talent as compared to that in Florida and California, but it will be very good.) TV appearances and cool fight songs are nice factors when trying to pull in recruits and there's no doubt that those are the reasons why Ryan Mallett and Donovan Warren are coming to Ann Arbor and Jimmy Clausen and Armando Allen are headed to South Bend. However, those guys are the exception, not the rule. The most important factor in recruiting is proximity to talent and teams in the Midwest and Northeast face a significant disadvantage in that respect.
I'd also draw a distinction between the South and the West at this stage. Michigan fans throw up their hands and say "we can't compete with Florida's and USC's talent" and then that leads to "there's more talent in the South and West," but that's not accurate. Florida did pull in an epic recruiting class, but their regional rivals also did well. Thus, it's unfair to expect Florida to replicate USC's dominance in the Pac Ten. Florida will have more talent than the teams that it plays, but the margin won't be huge, so the Auburns, Tennessees, LSUs, South Carolinas, and Georgias of the world will jump up and bite them from time to time. (And that leaves out Florida State and Miami, which could have renaissances at some point.)
In contrast to the South, I'd attribute USC's success, in no small part, to the fact that they have no significant regional rival and have been able to pick and choose the best talent out West. The talent pool in the West isn't on the same level as that of the South, but when one program gets all of the talent in any region, that team will be tough to compete with. Want evidence? How about this gem from Steve Megarjee's Signing Day wrap:
The addition of [Joe] McKnight gives USC six five-star prospects this season and an astounding 23 five-star signees over the last four years. The rest of the Pac-10 schools have combined to sign only six five-star prospects (Oregon wide receiver Cameron Colvin, Arizona defensive end Louis Holmes, California wide receiver DeSean Jackson, UCLA quarterback Ben Olson, Oregon running back Jonathan Stewart and Washington quarterback Matthew Tuiasosopo) during that same time frame.
Pac Ten programs not named USC took two of the top ten players in California this year. They took one of the top ten in 2006. They took three of the top ten in 2005. They took four of the top ten in 2004. Thus, in a four-year period, USC has signed 25 of the players on the California top ten list and the rest of the conference has signed ten. The argument that SEC fans should be making to belittle USC's success is not that USC would go 8-3 in the SEC, a totally unsupportable claim given the ridiculous amounts of talent that USC deploys. Instead, the argument should be that USC benefits from the fact that no one else on the West Coast can recruit worth a damn. Anyway, to get back to my original point, it's not correct to say that college football is currently ruled by the South and West. Rather, the statement should be that college football is ruled by the South and USC.