When USC lost to UCLA yesterday, it changed what looked to be an almost settled BCS picture. USC was to play OSU in the title game, Michigan would play LSU in the Rose Bowl, and Notre Dame would play the SEC winner in the Sugar Bowl. With USC losing though, where and who the Irish play is up in the air.
The Sugar Bowl is still the most likely destination for the Irish. USC now goes to the Rose Bowl to play either Michigan or LSU. If Michigan can jump to second in the BCS standings, the Rose Bowl gets the first pick of the at large teams and would still probably select LSU.
If Michigan stays at #3 and gets jumped by Florida, the Rose Bowl will still get the first pick among the at large teams to make up for losing Ohio State to the title game, but the Sugar will then get the next two picks. Most likely, the Rose will take Michigan with their selection and set up a USC-Michigan showdown.
Should the Rose Bowl select Michigan, the Sugar Bowl would then probably take LSU and Notre Dame. Would the Sugar Bowl like taking a local team would could mean less money in hotel reservations, restaurants, bars, etc since there would be a larger number of local spectators? The city of New Orleans is looking forward to having the Sugar Bowl back this year for the boost to the economy it will provide so the financial implications of picking a local team will most likely be considered.
The problem for the Sugar Bowl, should they decide not to take LSU, is the other at large teams do not create very compelling matchups. With the four at large teams likely to be Notre Dame, LSU, Michigan, and Boise State, the Sugar Bowl will have to pick two out of Notre Dame, LSU, and Boise State which could make Notre Dame-LSU the only pairing they consider.
So basically it looks like Notre Dame will be in the Sugar Bowl against either Florida or LSU depending on whether or not Florida jumps Michigan for #2.