SC and CU both had the same number of losses and SC had beaten CU head to head, along with the conference champ UW who had just destroyed CU. What you're not getting is that CU played like crap with an injured QB and no one wanted to have anything to do with them if they could help it.
And of course CU's loss to Oklahoma State matters. The scoreboard always matters. It proves that CU didn't belong in the Rose Bowl. Again, if CU was going to continue to make any sort of plausible claim to the Rose Bowl, CU had to win that game. They didn't so their argument is dead.
The bottom line is the better team got into the Rose Bowl and we had a historic game as a result. If CU went they would have just rollled over and played dead against PSU like they did vs. Oklahoma State.