I tend to agree. And the $120 million amount works out perfectly. The average salary of all the nominated players is roughly $60 million - which has some nice symmetry to it.
Also, adding the cap really allows for a number of varying strategies, in both which player to nominate (aka, Earl Whitehill) and who to draft when (i.e,. 1923 Schang lasting to round 10 while Whitehill's cheap season went in the first round).
Just imagine if there were 8 pitchers like Earl Whitehill nominated?