They made them the concensus # 1 team. They put them in the same category that some past Uconn teams were placed. It wasn't just against Uconn in their last game that they looked vulnerable, but in some of their previous games as well. Yes Uconn winning was not a shock, most fans thought that Uconn was a team that could beat them. It was just on how ND lost. That combined with their showing in some of their previous games.
I think you are correct in your assessment on why they were rated so highly, but counter to your belief, except for some fans posting on the Boneyard, most bought into it. Most fans did not expect the result that transpired in the Uconn vis ND game. They expected ND to win, not Uconn, especially not as easily as they did. It wasn't just that they over rated ND but also that they underrated Uconn.