I agree with you but I'm not sure the Texas Bowl selection committee would agree. I think locally the Texas Bowl having the state of Iowa show up to Houston would be a pretty smart move but I think the committee would assume that most Cyclones/Hawkeyes fans aren't interested in a rematch (since there will be one anyway in IC next season). I am but I'd guess if we did a poll I'd be in the minority.
Even if both teams were eligible and slotted for the Texas Bowl, it wouldn't happen. You'd see a replay of the 2001 Alamo Bowl - Iowa vs. some Texas team.(TAMU? Baylor?) No way they'd take two teams from a small, far-away state who've already played once this year...reputation for travel or not.
I think ISU would need to win 2 out of the next 3 to avoid the Pinstripe Bowl.