I don't see this happening. I'd still go watch UT play even if they aren't going to be competitive because that's what fans do. PSU will still have fans that love and support them. Granted, their fanbase will take a HUGE hit but shutting down the program is the dumbest thing they could ever do. And no way I see them playing at that level. When you look at the culture in PA and the highschool talent in that area (not nearly as good as Texas and other places but still pretty darn good) then you grow up being a PSU fan and wanted to play for the team just like us East Tennessee boys do when we play. I don't see everybody completely jumping off the bandwagon and still think they field a somewhat competitive team. They'll be bottom feeders in the B10 but it's not like B10 football is the SEC, they'll suck but probably not nearly as bad as people think.
Truthfully, if something like that happend at UT, i'd be devestated. But the actions the NCAA and PSU have taken should at least show people that things are being done and if you want to write a program off you've grown to love just because of the decisions of a few individuals that's no longer associated with the program than that's sad. As corny as it is, it's not always about winning and losing, some of it has a lot to do with pride and being proud of the guys repping your school colors regardless of their talent.