I appreciate that perspective and in many ways it is true. However, the fact remains that the NCAA tournament games (and Holiday tournaments and conference championships) are played on “neutral” sites in similar arenas, with a mix of fan bases coming and going. I think this is why you’ll find the coaches of the teams find real value in this.
IMO, this game feels odd more for fans who’s main experience watching college BB and specifically the Cyclones is in Hilton. Yes, there is nothing like it on the planet.
That said, the reality is any successful team needs to perform in these neutral sites too and this is a great way to dip their toe in the “mixed fanbase” water so this isn’t such an odd experience in the future when it might really matter. (not to mention from a fan experience, it gives Iowans and BB lovers in a unique way to watch all our state’s teams live, in one day.)
Bottom-line: If you evaluate this experience using a game on a college campus as your barometer, you’ll always be disappointed. However, if you view this instead as an experience the team can benefit from and also provides a unique (note:I didn't say the best) fan experience, I think it is a very worthwhile event.