I think you're confused. What passed in a landslide was legislation to allow those few D3 schools which had a D1 play up (five all together, including RIT and Union hockey) and who missed the last grandfathering period to now be allowed to offer scholarships for those D1 teams. That's it. And the reason that was done was because there was never, ever going to be anymore play ups allowed. So, they could finally close the book on that issue.
Hmmm. I went back and read the proposal again. It looks like you are correct. I was interpreting it much more broadly.
If Utica can't do it, that would prevent them from moving up divisions just to get away from teams they can't beat when it matters.