From 1936-1992, the No. 1 and 2 teams in the country as ranked by the Associated Press met eight times in bowl games. In the past nine years of the BCS system, the AP's top two teams have played six times. That's not to say there isn't a better, untried option, but the BCS definitely improved on the old bowl system.
As for the BCS formula, well, you have to base it on something. The 'Human' polls are 2/3 of the formula, the other third is an average of a bunch of computer picks. For instance, this week, Ohio State was tied for fifth in the computer rankings, but was first in AP and USA Today. If their schedule had been a little weaker, they may not have had first, and even winning out could lose first place to a winning team, highly regarded by journalists and coaches, with a stronger schedule. Short of a playoff, which is not likely to happen in Division I, this is a reasonable way to choose the teams that should face off in the BCS bowl games.