I am not cynical by nature.
Unfortunately, the most cynical interpretations have sometimes seemed to be the most accurate explanations of decisions by the NCAA, an organization some cynics have dubbed the National Conspiracy Against Athletes.
A cynic might say that giving individual institutions the option of granting multi-year scholarships is primarily intended to protect the NCAA in its legal battles over its transfer rules and the price-fixing, restraint-of-trade implications of the NCAA's former prohibition of multi-year scholarships.
A cynic might also express confidence that the recommendation would not have been approved if it was at all likely to change competitive balance or strengthen the athlete's hand in dealing with member institutions.
But then again, I'm not a cynic.
p.s. warningtrack, please let us know which school takes the view you describe and then keep us posted on a) whether they actually start granting multi-year scholarships, b) whether it affects the actual attrition rate of its athletes, and c) how the team's competitive fortunes fare.