OP has it completely backward.
For many years, I agreed with this opinion. However, college football has changed - A LOT. ND is alone on an island (not Key West) without a conference. We do not have a built in recruiting region (northern Indiana???). Our glory days are long gone, and the current generation has never known an ND national champion.
The only reason ND is staying relevant is our academic standards. It provides something substantial and different to our recruits, and allows a national recruiting base. We won't be able to recruit EVERY player, but those that we do have a tangible difference in an ND offer. That means a lot to some players and parents.
Look at our talent level and recruiting rankings. We're right at the top every year. Could we do better with lesser academic criterion? Maybe 1 or 2 players each year. Maybe. That doesn't get us over regional powerhouses like Bama, LSU or OSU.