I'm cutting out your text because despite it being a very good post, I need the character count. ;)
If the team at #1 was not LSU, though (say, for example, West Virginia had beaten them and ran the table to finish #1), would you still say Oklahoma State should go over LSU? Or do you think Alabama is the #2 team but shouldn't get to go specifically because of who is #1?
I think the BCS is ridiculous, personally. I think any team in I-A who finishes the season undefeated (and untied, when that mattered), wins their bowl game, and is not ineligible because of NCAA violations should be considered at worst co-champions. Boise State, Utah, Auburn a few years back, Tulane, etc., all have shares of national titles in the past decade or so in my book. The fact that these schools won't claim them disappoints me. And I think, if it were up to me, I'd put Oklahoma State in the title game. But I think that the one thing they have right is that Alabama is the #2 team in the country, and if it weren't for the fact that the #1 is a team they lost to, there'd be no complaints at all. Same thing if Florida had lost in the '05 SEC championship game after USC had already gotten beaten by UCLA.
Consider the alternative to your critique of "every game matters" : what if every other team in the nation had two losses? Should LSU and Alabama still not have a rematch even though there's no doubt at all in that scenario who should be #1 and #2? How about if everyone has three losses? Obviously, these are hypothetical, but the point is that it is ridiculously easy to construct a scenario where the "every game matters" mantra is simply impossible to uphold no matter what. Which, of course, is why a playoff is the best answer -- because any scenario where a team can not play for a championship is not one that deserves to award something called a championship in the first place.
The BCS' stated purpose (as opposed to the real purpose, financial enrichment of the big boys), is to pair up the #1 and #2 teams. Period. Not to protect the notion that every game matters, to determine the best matchup or the fairest one, just to get the team considered #1 and the team considered #2 and play them against each other. And they actually got that part right this time, no matter how much I dislike that.
As far as the last question, if Alabama beats LSU, as far as I am concerned LSU won the title in the regular season and I hope the AP at least gives them a share of the championship. My ultimate doomsday scenario would be something like Florida losing at LSU in the regular season, beating them in Atlanta in the SEC CG, and then a rematch in Miami (or flip it so LSU loses at Florida and has the rematch at the Sugar Bowl). If Alabama had come onto Florida's schedule a year earlier, there could have been a similar scenario there. Unfortunately, as a Florida fan I know that's not happening any time soon, since the team sucks specifically and the SEC East sucks in general.