I view Ohio State as a cut above Penn State in the hierarchy of college football. Franklin actually has Penn State just about maxed out, in my opinion. Completely agree that they could do better with a better QB/receiver tandem and would be dangerous if they ever caught lightning in a bottle for a few seasons, but I don't put them on Ohio State or Michigan's level (even though Michigan especially hasn't always performed to that level over the last few decades).
Penn State is like a purple blood, along with maybe Auburn, Florida, Florida State, Tennessee, and some others. At least to me. But I also think the southern schools typically have an advantage within each tier. So if Penn State and Florida are both at full potential, for instance, I'm taking Florida. This all makes sense in my head, but that might be the only place it makes sense.