One of the most frustrating (or entertaining, depending how you look at it) aspects of the bowl system is you never know what team will show up 3-4 weeks (sometimes more) after their last game. It's so unpredictable. Some teams look better (Alabama) while others look worse (Notre Dame).
For that reason, we should always want to reach the highest bowl possible. As Irishbounty said, talent isn't an issue. We can play with anyone in the country on any given day. We could reach the Sugar Bowl and beat down a SEC team that everyone is scared of right now (ala Louisville last year). We could also go to the Pinstripe Bowl and run into a buzz saw in a Rutgers team that plays their best game of the season. Going to a lesser bowl does not guarantee victory in the same way going to a BCS does not guarantee an embarrassing defeat as many Irish fans are predicting.
Bottom line, performance through the first six weeks of the season is a very poor indicator of how a team will perform after New Years, and, frankly, performance through the regular season is also often a poor indicator of how a team will play in a bowl game.
And, honestly, hearing ND fans say they'd rather go to a lesser bowl and look good because they are scared to get beat in a BCS bowl is downright embarrassing. You should be ashamed of yourself for having this defeatist attitude.