The first thing I think any discussion about the success or failure of our nearby competition is mostly speculation.
I don't believe you need football first versus good academic kids, to win it all. As any freshman recruit is not developed to his fullest when he first steps on campus, I think you need the "right" kid for your program, and I think the attitude, behaviors, and work ethic you install are king. I also think it is very important to start with the right kind of kid; and Dave Casper said it best. He said it was about a certain type of person picking Notre Dame, and then there is a little polishing done. So he made it clear, the way he saw it that Notre Dame was not for many, and that needs to be dialed in to recruiting expectations.
So we may lose a kid or two to another school, but I think that is the most that has ever happened. And I think we are ahead of our near-by competition in the recruiting game, anyways.
As far as the other schools in the region, football factories to august institutions of higher education, I hope they beat the shiit out of everybody else, and that ND always beats the shiit out of them.
Seriously, others have said this, part of the success of the SEC, other than the cheating, weather, and hot and cold running women parts, is their proximity to each other. Their proximity geographically, as well as conference wise, all help.
It is like with marketing, one strategy is to get as far away from the competition as possible, another is to build right next door. How many times do we get recruits coming in on a three school swing? And don't say we get shut out; no one has grumbled too badly at the classes we have signed lately.
In fact, someone published an interesting analysis that says the coaching staff is hitting closer to the top of their board with each class. I believe getting back to the days of top mid-west football can't do anything but help ND's efforts.