spread the talent around, so how should we do that?

First, I propose that we limit the number of out-of-state/out-of-region recruits for each school based on a 4 yr. rolling average of Blue Chip recruits for your state. Each school should be able to offer from 5-10 (totally picked out of my butt) non-regional (National) players based on the number of blue chips in their region. so a team like Tennessee or Iowa would be allowed to recruit more National recruits than, say, an Alabama, USC, FSU, Miami, UF, LSU.
It would have to be analyzed to come up with actual figures, but Alabama carries 114 players on their roster and only 35 are from Alabama. I didn't count how many from the Region and I don't know how the Regions would be established. A lot more to be worked out here, but you can't have all the 5 and 4 stars ending up on so few teams and expect to keep balance.