I don't think that was the point. I think the point was that you reward the guy who honored his end of the bargain when he came to ND. The guy who actually put in the work to stay eligible, and worked hard to make a difference on the field. If you have to choose between 2 of that type of individual for just one slot, then there is nothing bad about not giving the one guy his 5th year. But it's bad karma to deny that guy, while rewarding a guy who hasn't lived up to his side of the deal.
Not only is it bad karma but bad coaching from a team chemistry standpoint. Rewarding those who continually screw up and are not all in is the most sure fire way to torpeado a team and a program.