I can't argue with what you've said. I would guess that the market would determine the salaries; Bilas didn't say much about how that would work. Under VA state law, all our athletic scholarships must come from private funds. An in-state scholarship costs the fundraisers less than an out-of-state scholarship.
I always advocate that we be real in this type of discussion. Every D-1 school from Harvard on down has places to stash athletes. At UVa, we have the beefiest set of anthropologists in academia. The question each school has to decide for itself is where is the cutoff of who is in a position to be stashed?