I've got a pretty good fix for that little bug where Baylor and North Texas are *the* places to play by year 3.
Just create 2 mid-major type schools *in* Texas, then add them in before you start your dynasty. Put them in appropriate conferences like the Sun Belt or WAC or independent, and replace teams you don't care about that aren't from major states.
You'll lose some realism in the sense that you may not have UConn or Utah State in the game, but these new guys will compete with the other Texas schools and do that little bit to spread the wealth.
You can also put in 1AA teams from Texas if you'd like, but it takes them some time to catch up and it may be too late.
Finally: One question for you guys, have you found schools in Florida or California getting too powerful as well? I haven't noticed it *really* bad but haven't paid attention either. If so I'll probably make a mid-major for one or both states next time I start a die-nasty.