I know Iowa hasn't been to the Music City, but they just lost half their skill positions from an already terrible offense and they have a worse record than Minnesota. I just don't see how they are perceived as a desirable pick this year.
Well, if a group of decision makers in Tennessee think about this the same way as you, then you're probably right but I doubt they're close followers of Iowa's season or roster dynamics. They're probably much more concerned about the SEC team that goes to the Music City.
Also, as we saw last season, entering the transfer portal is no guarantee that a player won't play in his current team's bowl. I remember watching U of Florida's bowl game last season and there were a couple of departing players in the portal who played in that bowl. Supposedly, 10 of the 13 Michigan State players who entered the portal last season were on hand for MSU's bowl against Pitt.
MSU portal players - Peach Bowl