There is a really good post on the board right now that breaks down what was happening. Essentially, we refused (for the most part) to go to a nickel package. That meant that the two linebackers (outside linebackers at that, mind you, who are big dudes) had to run and help cover the receivers. One of the linebackers tended to help more on the D line, so really, we only mean 1 OLB was doing it. That's why it appeared to show three versus two.
If we go to nickel, we are able to cover 1 on 1 no problem and not force our OLB's to run around covering guys who are much faster than they are. Expect to see us rush 1 OLB/put 1 OLB down on the line, and bring in a third coverage man like Reed against Oregon. That way we can have the two ILB's stuff gaps and stop the run, and we can cover against dumbass bubble screens like what Arky State did to us all night.
Now, if your question is "Why did we stick with a scheme all night that was getting us gashed?," I honestly don't know. The poster on the thread I'm referring to did mention that Diaco is not stupid, and he's a good defensive mind, so he must have had some kind of reason for doing what he did, and he will likely make adjustments like moving us to nickel in the future.