All private schools are not created equal. Most will not be able to just become recruiting machines. I do not see Ezell Harding, Boyd, TCA, and FRA(for example) out recruiting all the best athletes. Many small privates are struggling with decreasing enrollment. They can't afford to get into arms races with each other. Most privates do it want the split because they do not want ton compete with only other private schools.
That being said I still favor a merit based system. You win consistantly you move up. Winning a championship in the highest division that way would really mean something!