You're correct that it's short sighted and something folks from other parts of the country wouldn't understand. That's because it's classic small-time, parochial New England thinking. BS College doesn't see much beyond it's own little backyard, and it has quite a lot of competition locally in its best sport, hockey. It's also seeing local competition from schools such as Harvard lately in BB, as the Beagles have declined precipitously and Harvard has ascended. They think the only way to remain relevant, even in their own home market, is to torpedo anybody they perceive as a threat to their local market share. UCONN represents their biggest threat in that regard.
As for football, the Beagles have been a DI school forever, but still haven't made it to a BCS bowl. UCONN has been DI only since 2002, and has already been to a BCS bowl. That's what scares the pants off Father Lie-hy and the rest of the Beagle administration. If they get permanently overshadowed by UCONN in football, they feel they're done in New England, even in their own local market. They'll do anything they can to keep that from happening. Getting beat in football by Clemson, FSU, UNC and Maryland doesn't phase them. Getting beat by UCONN in football would be an unmitigated disaster as far as they're concerned, and they know it would just be a question of time before they become second fiddle to another New England DI football program.