First I don't but y the flukey win theory. You win, you win. PSU beat OSU- period. OSU beat Michigan- period. Michigan beat PSU- period.
Second, comparing how a team did one week versus a team, with how another team played another week is a very innacurate comparison. Games, situations, and conditions, are always different. So it doesn't matter if OSU beat Michigan while Michigan beat PSU, or if OSU beat MSU by 1 and PSU beat MSU by double digits- unless you consider the specific game, the situation, and the conditions.
Third, while Conference Championships mean a lot in terms of who gets the trophy for conference champion, it means little in establishing if you are establishing the best team because of the degree of unbalanced schedules in college football.
Fourth, who is playing the best at the end of the season matters but doesn't negate the rest of the season. And if you are evaluating who is playing the best at the end of the season, it also matters how fare you go back. If you go back 2 games OSU had two very close games, one games but one was against the 3rd ranked team in the playoff poll. If you go back 4 games OSU had two 62-3 victories- one against Nebraska, and a win over the #3 ranked team in the nation. Comparatively PSU gave up 31 to Indiana in a 2 TD victory, soundly beat Rutgers, sound win over a MSU, and say a victory over #7 Wisconsin. Both are strong finishes and which is better is in the eye of the beholder.
Finally, because of the unbalanced schedule, who you played and who you beat does matter. For example, I think the teams OSU played in the conference this year in #3 Michigan, losing a close one to PSU, beating Wisconsin and Nebraska, in the division crossover games, trumps the conference schedule OSU played last year. So although with identical 11-1 overall records and a belief that last year's Buckeyes were better than this year's, If OSU had last year's schedule this season, I don't think they would or even should be in the argument.
If you look at the Big 10 alone, OSU, Michigan, and the Conference Championship Game winner all have legitimate claims, but none have the decisive number of claims. So it does end up being subjective.
For me personally I can see why OSU would have a slot in the playoffs, but I could understand why not. Same goes for PSU, and on Monday I thought Michigan should be out, but as the week has progressed I can see how if Colorado beats Washington they might have an argument.