I think most UM fans had assumed UM was going to be relegated to the Insight Bowl, but with Iowa's amazing choke at Minnesota does UM's bowl position improve?
Iowa, PSU, UM and N'Western are all tied with an overall record of 7-5 with Illinois possibly joining the mix if they beat Fresno State in Fresno. While Iowa and PSU both beat UM and have better conference records, bowl selection groups could still take UM over one or both of those teams. UM still is perceived as a "brand name" team and has not been to a bowl game in the preceding two seasons which might be enough to secure a higher than expected bowl bid.
If I had to lay money on it (Hey jamiemac, do you want to make up the odds for this?), I think UM gets picked ahead of Iowa but behind PSU and ends up in the Gator Bowl at this point.