Ok, gonna break it down...
The Big Ten has no tie breaker. You simply have "co-Big Ten champs" on your trophy. Now..the BCS is another story.
If Michigan wins....they are outright champs regardless of Wisky-Iowa outcome and will represent the Big Ten in the Rose Bowl.
If Michigan loses...with a Wisconsin win, Badgers are Big Ten reps (due to their overall record).
....with an Iowa win, Michigan will be big ten reps (Despite Iowa and Michigan having identical 9-2 records) due to their win over Iowa.
I think that covers it. Hope this helps your headache.