The NCAA rule restricts schools from the use of "derogatory" nicknames during postseason events that are run by the NCAA:
http://sports.espn.go.com/ncaa/news/story?id=2125735
It's not a ban on the nicknames themselves, per se, but the punishment of not being able to host NCAA postseason events is pretty detrimental to athletic departments.
As to why UND isn't leading a charge to change that rule, you halfway answered your own question.
The vast majority of people that actually run universities (whether prestigious or not) are Ivy League-types, which is why that rule got passed in the first place. Trying to change that rule would be about as popular as a Tea Party candidate running for the mayor of San Francisco. If schools like Illinois and Florida State couldn't get the rule changed, I don't quite see how UND is suddenly going to make a different move (especially within the next 2 weeks).