I could see this scenario being played out...
Michigan @Penn State - Penn State wins. Michigan lone loss
Penn State @ Ohio State - Ohio State wins. Penn State lone loss
Ohio State @ Michigan - Michigan wins. Ohio State lone conference loss (2nd loss)
3 way tie with 1 conference loss. 3-way Tie breaker goes to highest ranked team. In this case, it would be Penn State or Michigan. I would imagine Ohio State would rank lower with 2 losses.
Michigan @Penn State - Penn State wins. Michigan lone loss
Penn State @ Ohio State - Ohio State wins. Penn State lone loss
Ohio State @ Michigan - Michigan wins. Ohio State lone conference loss (2nd loss)
3 way tie with 1 conference loss. 3-way Tie breaker goes to highest ranked team. In this case, it would be Penn State or Michigan. I would imagine Ohio State would rank lower with 2 losses.