...I believe we are both correct. It appears before the major 2006-2007 changes the "No. 3" rule had gone into effect, but it was also not part of the original 1998 format.
I know there were a few tweaks and adjustments made in the first five or so years of the BCS, and this might have been one of them.
So, assuming all else was equal except the loosened terms for non-AQ bids, and the extra game, it is most likely that Utah would have played Texas in the Fiesta Bowl in 2008. I will leave it to my more adventurous fellow posters to speculate on what the fallout of that matchup would have been. I suspect Utah would have rather played Alabama, however, since the Tide were No. 1 for most of that year.
Either way, I think the most important thing about 2008 is that Utah didn't get a shot at the national championship game, whereas they just might have if they had started the season where BYU did.