I don't think scheme (3-4 vs. 4-3) is the problem. Personally, as a coach, I find the 3-4 creates more confusion for the offense and is harder to block up front. My team switched to a 3-4 this year and I love it, although I will admit that I think our blitz's between the tackles were more effective in a 4-3, but that's really the only positive I'd give to the 4-3 vs. 3-4 based on my experience.
So, what's the problem with ND's defense? Let's start by illustrating what's NOT the problem: Run defense vs. RBs.
RB production vs. ND defense
Temple: 16 rush for 55 yards (3.44 ypc)
Michigan: 25 rush for 85 yards (3.4 ypc)
Purdue: 17 rush for 36 yards (2.18 ypc)
The DL is absolutely eating RBs up in the run game. These stats are comparable to last year's defense through 3 games.
So, what's left?
1. Run defense vs. Mobile QB
2. Pass coverage
3. Tackling
1. Run defense vs. Mobile QB
Temple: 12 rush for 65 yards (5.42 ypc)
Michigan: 13 rush for 82 yards (6.31 ypc)
Purdue: 4 rush for 2 yards (0.5 ypc)
There's a difference between a designed run and a QB scrambling to gain yards with his legs. I don't have stats to back this up, but my guess would be most of these QB yards are a result of a pass play breaking down and the opposing QB (Temple and Michigan) using their legs to make something out of nothing while the designed run production mirrors the YPC we give up to RBs.
I don't think the 3-4 or 4-3 is better suited than the other to handle a QB scrambling for yards. In either defense, you're most likely rushing 4 or 5 defenders and containing the QB is a matter of technique vs. scheme. The responsibility of the rushers is basically the same in either defense. I think your ability to defend the QB run has more to do with the pass coverage (man vs. zone) than base defense.
2. Pass coverage
Again, the pass coverage doesn't really change from a 4-3 to 3-4. Most 3-4 defenses are bringing four defenders on every play. The advantage of the 3-4 is that the offense isn't supposed to know where that 4th defender is coming from. I think ND telegraphs this more than most 3-4 defenses do, but I can't say that with certainty due to limited knowledge of other college 3-4 defenses.
What's the difference between this year and last year as it relates to pass coverage? I'd say it's the amount of man coverage we're running. Again, that's not a 4-3 vs. 3-4 issue.
I think the increase in man coverage has exposed our ILBs more than anything and has contributed to allowing rushing yards to QBs when pass plays break down (too many guys with their backs to the LOS). The DBs are doing well in man. Have they really been burned in three games? Off the top of my head, no.
Could we improve our man pass coverage by playing more nickel and one less ILB? Sure, but again, that's not a 3-4 vs. 4-3 issue.
3. Tackling
Again, not a 3-4 vs. 4-3 issue. I can think of two plays (Gallon's first TD and Purdue's 2nd TD) where tackling was the problem, not scheme or coverage. I thought last year's "bend but don't break" defense worked so well because we tackled well as a team. This was likely the result of playing so much zone coverage and keeping everything in front of the defense. We simply have to do a better job of tackling, which is a claim 80+% of football teams across the country (all levels) are probably preaching three weeks into the season.