Probably should be based on defensive ratings, that would seem like the fairest way to do it. Take the top 8 players from each team, average it out. Then top 65 teams for D-1 would be at very good. Take next 65 put them at good etc and keep doing that way until you get all 324 teams.
A very good, top 5 ranked team, can play a strong schedule and only wind up as "good", where a good team from a weak conference can load up on playing against scrubs and end up with "very good".