Bowl games are about two things...
1) Attendance. First you have the direct benefit from selling tickets for the host stadium, but you also have the sort of indirect benefit the city gains from people going to local restaurants, hotels, bars, etc.
2) TV ratings. TV viewership brings with it money.
If you look at the selection process from solely an attendance point of view, then inviting Iowa and ISU for a rematch in...say...Miami wouldn't be a bad call. You'll probably pack the stadium, and a decent number of fans would probably travel and watch the game in local establishments.
However, from a TV viewership standpoint, unless it's #1/#2 Iowa vs #2/#1 ISU for the NCG, I honestly can't see people outside the state tuning into watching a bowl game with these two teams. Even if you believe alums outside the state will watch, that really can't be all that many people.
Anyway, with the Insight Bowl the only Big 12/Big 10 matchup (I think), we'll either see an Iowa/ISU bowl game if both teams are really good or really bad (with regard to bowl eligible teams). Or by some strange set of circumstances.