While I mostly agree with you, I'd like to point out that the situation of the Ivies has a lot to do with 1) Being among the oldest universities in the country, and thereby establishing a successful alumni base in the most powerful area of the country before many other universities even existed 2) A reputation for elite research, drawing donations from all over the place to fund things like medical schools that constitute enormous fractions of endowments and expenditures 3) An elitist attitude that draws wealthy WASPs from all over and 4) Location, location, location.
Football could have helped Harvard a bit, but a few million a year pales in comparison to a $30B endowment, which was already large before the decision to mitigate football was made.
I'd love to see ND develop the same degree of academic reputation as the Ivies, but to do that we'd have to sacrifice some of our core principles, such as the intensely Catholic nature of Our Lady's University. We'd also likely have to make some compromises to our undergraduate focus (though the success of Princeton and Dartmouth implies otherwise).
I believe it is possible to have an elite academic school that compromises nothing while also having a successful football program. For that, I think we should follow Stanford, Princeton, or Navy (Work with me. These are historic football powers. I understand only Stanford is presently at an elite level. Just throwing out examples of schools that either presently or at one point successfully fused the best academics on earth with the best football on earth.)
