Pod 1: NW schools.
Pod 2: CA schools.
Pod 3: AZ and MTN schools.
Each year, you'd play everyone in your pod and three of the four teams in each of the other pods. (For instance: The NW schools would play three of the four CA schools every year.)
However, Pac-10 officials may have run afoul of NCAA bylaws in creating this system, because in order to have a championship game, there must be a round-robin schedule between divisions:
188.8.131.52 Annual Exemptions. [FBS/FCS] The maximum number of football contests shall exclude the following: c) Twelve-Member Conference Championship Game. [FBS/FCS] A conference championship game between division champions of a member conference of 12 or more institutions that is divided into two divisions (of six or more institutions each), each of which conducts round-robin, regular-season competition among the members of that division;