In a way it may be "dumb." But, at least Nebraska made a statement to its fans and the football world that it cares about football and is committed to winning. That may be worth $7.5 million dollars by the time you factor in things like fan support, attendance, product sales, morale, public relations, advertising, recruiting, retention, good will, etc.
If Frost gets another coaching job, he may do great. Sometimes, when you go to a place you care a lot about, you try so hard that you just don't do as good as you usually would. In a way, in spite of all the money he got, I still feel sorry for him, but I think Nebraska made an important statement for its fans.