It's possible that Utoff told the coaches that part of the reason he was transferring would be more playing time. If that was the case, I could see them restricting ISU, Marquette, and possibly other local BCS level schools as a way of forcing him to stay to his word and not transfer to another "big school".
Then why not restrict DePaul and Notre Dame, which are probably as close or closer to Madison as Ames is, or dozens of other BCS level schools? I think you are giving Bo too much of the benefit of the doubt. I think that Bo is trying to punish Uthoff for transferring because that is not in his plans (or trying to talk him out of transferring all together), so he tries to block the BCS school in his home state with two scholarships open and a history of accepting transfers as a potential (and likely) landing spot.