They definitely don't have to be good at the academic stuff. I go to FSU, I had a starting DB in one of my classes, I'd talk to him every class and he's a great kid and a very good football player, but I find it hard to believe that he was excelling academically. I mean hell, he failed freshman English so he had to re-take it as a sophomore.
Just playing Devil's Advocate here, but if a normal student on any other scholarship failed a class, nonetheless freshman English, that scholarship would be taken away in a heartbeat, but athletes have virtually unlimited second chances when it comes to academic standing.
If you're truly in THAT bad of academic standing, where your seemingly invincible athletic scholarship is revoked, that's when the program intervenes illegally or the player makes a poor choice (a la UNC football, a la Maurice Clarett, etc.). Obviously, that doesn't happen everywhere, it depends on the program and it depends on the university, but there's plenty of previous that show that it is ever to present in college sports.
Sure, some students take advantage of the free education that's given to them. But at the same time, some don't. A kid I went to high school with, top 15 basketball recruit in the nation, told a teacher to her face that he doesn't do his math homework because he's "going to go to the league, make my millions, then hire someone to do math for me." I feel like that is the attitude of too many gifted athletes that are being presented with terrific opportunities, both on the field and in the classroom.
I'm not saying I'm completely against players being able to make money of their own. If the NCAA announced tomorrow that players could profit off of their own image in jersey sales, autographs, and so on and so forth, I'd have absolutely no problem with that. I believe players should be able to make profits off of that. It's when you get into the topic of paying players a "salary" where things get sticky and I think there's a lot of gray area there. In fact, I think that there's an argument that players make more poor decisions because they don't get paid (Terrell Pryor). That's why I think a standardized and universal monthly stipend would be the ideal solution. A college athlete on a scholarship doesn't need an overwhelming amount of money, particularly when housing, food, and clothing are covered. Like you said earlier, these players have so much going on with their academics and athletics that dwarfs the average college student. I don't see how a student-athlete, that has to practice/train/study/learn/go to class 5-7 days a week needs all of this extra money from the university/NCAA when they're so pre-occupied with everything else in their life.