well a couple of things. First every kid aint a hired gun, so they could pick a school they really really want to go to. Second if you had already talked to a kid about red shirting their first year, really how different is grey shirting? Yes you miss fall practice, but if you are red shirting, you don't get a lot of work in individual drills, let alone team, most likely you are on the scout team running someone else's plays. So now you show up in the spring (and lets be clear, to grey shirt you don't have to pay for your first semester etc, you just aren't in school), and really you are about even with everyone else who red shirted that fall.Nobody cited anything about NCAA rules. Asking a kid to pay a semester's tuition, even if it's as a part time student, isn't exactly welcoming him with open arms. As mentioned above, the real advantage of a grey shirt would be for a kid who his rehabbing an injury. Unless a given healthy player had a lifelong dream to play for a certain school, why would be sit out a semester when he could accept a scholarship offer elsewhere?
IMHO, I wouldn't classify grey shirting as a loophole. A student athlete gets five years of eligibility upon enrollment regardless of age.
http://www.athleticscholarships.net/question/what-is-grey-shirting
I doubt anyone with a choice between PSU and OSU is going to be asked to Grey shirt. It is more likely it is a choice between Grey Shirting at PSU or getting a full ride to Indiana, Perdue, or Marshall, now you decide what you want to do.