-"Who decides who the best teams are?" - Um the same way we do now? There are criteria in place (conference record, head to head, winning percentage, etc).
-It's the conference job to make the pods + permanent crossover as even as possible. So, if perhaps there was a weaker pod (e.g. UK, UT, Mizzou, Vandy), count on the permanent crossovers being tough. For UT, their permanent crossovers could be Florida and Alabama. For UK, it would be Georgia and Texas. Etc etc. The pod grouping doesn't matter, the annual permanent opponents matter (just like under the current format Alabama has a more favorable arrangement by having UT as its permanent crossover vs. LSU which has to deal with Florida).
-I think the reason two permanent crossovers is to try and balance out strength of schedule, as stated above. There aren't many teams that would require two permanent crossovers to preserve historic rivalries, but it could be used to make sure that all of the teams have an equal array of strong and weak teams as their annual permanent games.
no system will be perfect, but I think this is a preferable situation to having two eight team divisions. There isn't a reason for UK to play alabama and auburn every single year while only playing Texas and Oklahoma once every 8-10 years.