[Logos in white boxes represent potential additions. The red areas are the current South Division, and the blue areas are the current North Division.]
With BYU's success as an independent team (despite losses to Virginia and Utah, the latter a recent Pac-12 addition), I still think the Cougars would be a good fit for the Pac-12. That's the real rival for Utah--not Colorado, who doesn't have a real rival in the Pac-12.
I know the conference is expressing reluctance to expand, but it wasn’t too long ago that it was talking about 16 teams. Also, it doesn't seem like that long ago that the Pac-10 and Big Ten didn't want to expand, didn't want a championship game, and didn't even want to be involved in the BCS. Both wanted their champion to play in the Rose Bowl and for that to be the end of it. A few conferences seemed happy at 12 but have expanded/are expanding anyway.
I still don’t understand why public “research universities” is such a priority for Pac-12 admission, but people always bring it up. I had never heard much about Utah or Arizona St. (or a couple of the more long-standing Pac-8/10/12 schools) being academic powerhouses. Anyway, I do know BYU is a good school (without so much research maybe), and since they’re unaffiliated and there are two schools in the Rockies unconnected with the rest of the conference, it seems it would fit.
Although I don’t know anything about its standing among other schools academically (promotional materials seem to make their research sound impressive: http://www.depts.ttu.edu/vpr/), Texas Tech would be a good way to expand into the pool of Texas talent since it is in Western Texas, actually not very far to the East (although significantly to the South) of Boulder, Colorado. It was one of those potential additions to the Pac-12 when the Big XII nearly fell into pieces.
How to align the divisions would be a challenge, although I do have an idea of how that could be done. Basically, take the 7 rivalry pairs and put all the more sophisticated schools in one division and the other schools in another. Washington St. and Oregon St. seem a little grittier than Washington and Oregon, the latter two being rivals of one other anyway. Stanford/Cal, USC/UCLA, and BYU/Utah are fairly obvious since the first one of each pair is private and the second public. I don’t think I have to elaborate on why Texas Tech is more rough-around-the-edges than Colorado. Just imagine Boulder, then imagine Lubbock. By reputation, Arizona seems a little more buttoned-down than Arizona St., but I’m not sure that matters either way.
Colorado could have an even better rival in Air Force, although that doesn’t really expand the recruiting base. It may add to fan interest though. The service academies have fans scattered all over. Of course, Air Force also regularly played BYU and Utah when all three were in the Mountain West and WAC. The team right now is pretty bad though. You don't always want to focus on the short term, but I think that would be a meaningful concern. The Pac-12 doesn't want another doormat.
Boise St. doesn’t have much of an academic profile, but that would seem to make for an easy transition. The Broncos already have the talent and interest to compete, and it would be natural to add them to the Pac-12 North and BYU to the Pac-12 South. I still think teams in Colorado and Utah being in the South seems a little off, but my understanding is everyone not in California wants to play in California at least once a year.
Fresno St., UNLV, San Diego St., and San Jose St. could be other possibilities if academics aren’t a priority. UNLV and San Diego are big unexploited media markets for major college football (and in the case of UNLV, there are no major professional sports in the area either). I'm not sure how much San Jose St. and Fresno St. would add, so they're probably least likely, but they make obvious geographical sense. There are half a million people in Fresno and no major sports in the surrounding area, where arguably another half a million people or more live. San Jose St. isn't very far from Stanford, but not everyone is a Stanford person.
Another possibility I thought of was Hawaii, which apparently does have some research credentials, but that program has crashed and burned since June Jones and Colt Brennan left the islands, so it has some of the same problems as Air Force, except I think Air Force has better road fans. Logistics aren’t very favorable for Hawaii either, of course.
Nebraska is a long-shot, but I thought it worth mentioning. I don't think the Big Ten is quite what the Huskers signed up for. If they have to play a 9-game conference schedule and travel to one of the coasts, why not the Pacific Coast instead? With Colorado, at least they would get one of their traditional rivals back. Maybe if they joined along with Texas Tech, that would be the best way of including new teams in a more logical way.
As to how the divisional alignment would work, Utah could just be switched to the North and keep playing Colorado as a permanent opponent (or "protected series", as the Big Ten calls it). Berkeley is about the same distance away as Tempe (Arizona St. is the second-closest Pac-12 South opponent for the Utes) is anyway. Nebraska would also help out the competitive balance in the long-run. I'm sure that would be a really expensive proposition though.