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are they really a farm system for the professional sports leagues
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This has only, if ever, been the case in 2 sports and it really isn't the case in hoops any more due to younger signings and the international players. College football is just too darn popular to make any serious changes along the lines you speak of.
The problem now is the arms race. The schools with resources get better and better facilities and the smaller schools can't keep up. Without knowing it or intending it, the larger schools are putting the smaller schools in a place where soon they won't be able to compete but still have to field teams for the large schools to play. Having no competitors in business is great but in athletics, it sucks.
For example: Texas A&M and Rice used to be in the same conference and played home and home games every year. Now, Rice is a home "check" game for A&M -- Rice comes to College Station and A&M writes them a check -- which is for more money than Rice will get for staging a home game. These kinds of games aren't new, but then they weren't common between 2 schools that 20 years prior were in the same conference.
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but an act of congress which bans sports on TV would collapse this system.
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It would also be unconstitutional.