I think, first and foremost, that you must have Elites at each Level. Georiga Southern is an Elite D-II. I'd call Grambling an Elite.
At Year 1 the Elites would be based on Current History. Also, some would be much closer to losing that Elite Status due to Current History (like Notre Dame, and even Alabama although we are having a Return to Glory. I don't think 1 NC in 18 Seasons is Elite, but our History is chalk full so I would still call us Border Line Elite-On the Rise).
Perhaps D-III would not have Elites, to encourage moving up the Ladder to get those Elites, or perhaps those D-III Elites would not be open to the Public at Year 1 and you must show some success at D-III to move up to those jobs.
Now, on to how to handle Elites. I am not worried about what 'Benefits' they get. I am not in D-I to enjoy them, and the lower levels do not have such Elites to worry with. Still, as a player of this game I do have a vested interest in how things work at the higher levels for when I do rise in the ranks to play at those levels.
ELITE should be tiered. What I mean is you should have, I say, 3 Levels of Elite. When in the heat of a Run like Florida and USC have recently been in you would be Untouchable. What does that mean? Means you get a Free Year. You could wipe out (to a resonable extent) and be Okay. Field 15 Starting Freshman, scrap by with an 8 Win Season, and Reload for the next Run with no hitch. Still Untouchable. Now, if you don't hit the Marks for Elite on Consecutive, or even a 2 out of 3 Season range, then you go to Mid Elite. Mid Elite means you are still secure in your job, still get all the perks, but you better get back to those Level 5's and win those CCs quick. Then there would be Tier 3 of the Elites. THIS is the Dangerous Tier. This is the Entry/Exit Point.
Tier 3 is where I consider REAL ND and Alabama to be, each on opposite sides of this Tier. At Tier 3 you are in jeopardy of Losing your Job. Also, you are in Jeopardy of Losing Elite Status with the Team (making the Coach that busted his butt to get Elite Alabama very ****** at you when he gets his Dream Team and has to bust tail to try to regain what you lost).
Some teams will be programmed to kick you before you lose Elite Status. Other teams are ships that will go down with the Captain. These should Vary within each World (Stagg ND and Bryant ND may have different views on Coaches once they hit Tier 3 Elite, with Stagg booting the bum and hoping the next coach gets them back to the safety of Tier 2 and Bryant feeling he deserves the job and can turn it around on his own). Also, if a Team has a certain view and that view fails them multiple times (Don't fire Coach, lose Elite, Fire Coach. Back to Elite tier 3, don't fire coach, lose Elite, Fire Coach) they will Change Stance and the next Coach will have the Short Leash if they hit Tier 3 again.
So what happens when Alabama Moves to Tier 2? Does that bump anybody? No. There doesn't have to be any Schools in a particular Tier, although it is unlikely that would happen. There should also be no set number of Elites. You are only Elite if you Earn the Status. No arbitrary filling a slot with an undeserving team. You play like an Elite, you become an Elite. You don't play like one, you won't be one for long.
In other words, it won't take ND falling like a Rock to get, let's say, UCLA into the Elite Status.
HOWEVER, the REQUIREMENTS to become or stay an Elite should be high enough that you don't have 30 Elites roaming around. A mix of NC's and CCs, Total Wins, SOS, should dictate what an Elite is.
To summarize: Not Set Amount of Elites. Requirement stringent enough to not allow many Elites. 3 Tiers of Elite, only letting you know if you are Untouchable, Secure, or in Jeopardy of losing your Status. Each School has it's own Style (Keep Coach/Can Coach) when you fall to Tier 3. Elites based on Current History at Year 1. Elites at Lower Levels.