I agree that Penn State is the stalking horse in modern NCAA wrestling. I think Iowa can make a strong claim that they would be better for developing Nagao, given their track record at the lower weights, whereas Penn State's "holes" tend to be down this way, but that's a relative term for Penn State, since their big hitters tend to be 165 and up; they still have had RBY and Nick Lee recently, and with regard to RTC talent, you're 100% right, nobody is within a mile of NLWC right now.
It was super sweet of Nagao and Basch to run cover on the potential money portion of this, but I refuse to believe that God (if they exist) has an opinion on which school Nagao wrestles for. This is a Nagao decision, and that's fine! I don't begrudge him that, even if he end up at Penn State and I suddenly realize I have always hated him!