Iowa State proved that two years ago. I believe they were the #2 seed with the Illini being a #3 seed.To me there is not much of a difference between a 2 and 3 seed. I think it becomes more about location and particular matchups. It is more important to stay above the 4 line, as you avoid the 1 seed until E8. So I would gladly accept 3 seed in Chicago over 2 seed elsewhere.
Some experts actually thought Illinois was favored in that game by a a point of two.