Teams in the #5 through #13 spots in the Big 10 all have 3 and 4 wins. A lot of the Big Ten's issue is their middle teams are beating up on each other and you have 4 teams flat out dominating and separating. A lot of above average and good, but not a lot of great. They have been fortunate to have missed out on Oregon and Penn State, but they'll still play Ohio State.
It's not a great schedule at all, but they're beating quality teams. I don't put too much stock into rankings and such, because it's really based on record and where you were in the preseason. Go look at most years, Ohio State/Michigan will play each other plus Penn State and the rest of their schedule isn't scary in terms of record and rankings. But they're good teams. And their resumes never get picked apart like IU's had.
I don't think IU is some amazing team, but I'd also say look at Miami, SMU, and Clemson at the top of our league. They've gotten a pretty easy ride for most of their schedule.
You can only beat the teams in front of you. IU has handled the teams they should. They survived the close one against Michigan to pick up a quality win. I'm not saying they're great, but they have as good a case as anyone. In this new era, no one can really cry. The system generally should make sure the top 5 teams get in and everyone else is just filler.