There are really only a couple problems I can see with this method...
For one, it still would result in some historically weaker teams being theoretically even with the more dominant programs. Granted, a conference like the PAC-10 is usually pretty strong top to bottom. But as you go down into the lower divisions, especially into the NJCAA, there are going to be greater disparities between programs, and that won't be reflected very accurately. Now, if you had maybe 20 levels of baseball quality, it might work. I just don't know that 5 will result in a realistic hierarchy.
The other issue for me is that I am using my States-As-Nations mod. If I switch to a Conferences-As-Nations mod, I'm losing the ability to identify players' origins, which is a big thing for me personally.
However, there could still be some way to utilize the nations file to achieve my goal. One limitation I discovered recently is that there seems to be a limit of about 1,000 "nations" that you can put into the file. (At one point, I had the crazy notion of turning each
city into its own nation in order to create a high school league, but that obviously would exceed the limit.)
Anyway, I appreciate you brainstorming on this subject. If you have any further thoughts on it, please don't hesitate to share them.