AAU doesn't automatically correlate with great academics on par with Northwestern, Stanford, Duke, UNC, Michigan or Berkeley, although for some reason the BigTen likes to pretend that AAU membership signifies all members are the cream of the academic crop.

Nope.

For instance, Oregon, Arizona, UC Santa Cruz, UC Santa Barbara, Kansas, Iowa, and Iowa State are somehow AAU members but you would be hard pressed to find many within or outside of academia who would rank those schools ahead of VT academically, with the exception of UC Santa Barbara.

VT has a larger research budget than current B1G member Iowa and is basically tied with Indiana.

I know research spend is only one factor of many looked at for AAU membership, but of the top 50 general universities (not med school specific schools like Mount Sinai School of Medicine, etc), VT ranks 43 in research funding.

42 of those top 50 research schools are AAU members. The eight universities ranked in the top 50 universities by research funding that are not AAU schools are: VT, Georgia, Cincinnati, Arizona State, Alabama, South Florida, University of Colorado at Denver, and NC State. Among those schools, the best overall academically is Georgia (although VT has a larger research budget than Georgia), followed by VT and NC State.

If Nebraska was once AAU and current lower-academic ranked and lower-research ranked schools such as Oregon, Kansas, Iowa State, Stony Brook, Buffalo, and UC Santa Cruz can achieve AAU membership, VT should be able to as well, although when is anyone's guess. Schools don't apply for membership -- they must wait to be invited whenever the AAU decides that a non-member school's research and education profile exceeds that of a number of current members. Existing members who fall significantly below the criteria for new members or below profiles of current members are booted out (like Nebraska was in 2012). It's just a stupid waiting game to hopefully, one day, get an unsolicited invitation to join their club.