I have a few thoughts here.
No other club can compete with what Uni can offer as It is what it is and rugbyvet alluded to above. The fact is, they will always attract ambitious schoolboy superstars who have already been identified to fast track into the U/20s, academies and Super 15. I am sure some of these schoolboys seek out Uni and Uni seek out some of these schoolboys.
The issue I have is what these players get out of playing for Uni in the current situation. These schoolboy superstars dominate at school (probably playing for the best side - Newington, Joeys etc and are probably physically advanced). They then go on to dominate the colts comp at uni where they regularly put at least 50 points on sides and might get 2-3 genuine tough matches a year. They look a million dollars and get into the 20s and/or academies. They eventually graduate to uni grade teams where surrounded by other star players, they also succeed and continue looking like great players and eventually get picked up by a S15 side. Yes, they have been exposed to other professional players, a professionally run training program and high level S&C.
But, since school, chances are they have hardly played a tough game and been challenged. All of a sudden they have a S15 contract and are lining up again McCaw, Carter etc - a totally different kettle of fish
i think this sort of scenario has been the reason why some players have taken a while to find their feet at the next level.
For example, Luke Burgess probably never played behind a pack that went backwards during his colts and early grade career at uni - all of a sudden, behind a struggling S15 pack, he struggled to find his feet.
Luke Jones has started realising his potential this year and late last year, however he has been on the books of S15 franchises before that and it took him a while to get going at the next level. Jeremy Tilse has been on the waratahs books for about 8 years, but has never been comfortable in S15, while he looks great at Uni with 7 other good forwards around him picking off weaker packs
The Shute shield is our 3rd tier. It is in the best interests of all the aus S15 provinces to have an equal competition where players are exposed to tough, character defining matches.