An agreement between two powers that are separated by flat plains? I'm in!
My main reaction is that college football needs more agreements like this. At present, there is a race to the bottom in terms of non-conference schedules. With: (a) poll voters somewhat unwilling to reward teams for play tough non-conference schedules; (b) a plentiful supply of outmatched opponents as a result of the NCAA allowing wins over FCS teams to count towards bowl eligibility; and (c) major conference athletic programs funded mostly by their football programs, there are a host of incentives for teams to maximize home games and minimize contests against quality opponents. The way to beat programs out of this mindset is to create formal structures.* Some teams are constrained by tradition. I'm sure that Jeremy Foley would play four non-conference games at the Swamp against tomato cans if he could, but the tradition of the game against Florida State prevents him from scratching his worst itch. Teams that are not constrained by tradition need other rules in place to force them to play watchable games. Wisconsin won't leave Camp Randall to play a competent opponent? Jim Delany will just have to force them to behave.
* - The other factor that would force major programs to play quality non-conference opponents would be a softening of ticket demand. Programs get away with scheduling directional schools right now because they know that they can sell season tickets regardless of the presence of multiple weaklings on the slate. If athletic departments sense that they are having a hard time selling season tickets because of soft opponents, then they will schedule better. The Pac Ten is already in this boat because the intensity of their fan support is not equal to that of other conferences. I can see a future where Stubhub has the same effect on season ticket packages as it is currently having on bowl tickets. Right now, schools struggle to sell their bowl ticket allotments because fans know that they can get the tickets at much lower prices on Internet ticket sites. What happens when fans also realize en masse that they don't have to pay to see New Mexico State and they can instead by tickets to the best games on the Internet, thus spending less and still seeing the games that really generate interest? New Mexico State comes off the schedule.
Aside from the obvious benefit of giving fans better games to watch, the ancillary benefit of the Big Ten-Pac Ten alliance is that it will make it easier to judge teams at the end of the season. Part of the problem with college football's current structure is that the BCS has an already difficult task of picking the two best teams from a field of 120 and then its task is made harder by the relatively small sample size of games between BCS conference teams. It's hard to compare Alabama and Oklahoma State because there are so few connections between teams in the Big XII and SEC. While an alliance between the Big Ten and Pac Ten doesn't solve that specific problem, it does increase the number of meaningful games and therefore gives us a better sense as to teams' relative strengths. If the pact is successful, then other conferences will copy it. The natural dance partner for the SEC would be the ACC, although an alliance with the Big XII (plus four) would also be doable. Who knows, in ten years, we might be able to use real evidence to back up our claims of SEC superiority before the bowl games.