Sorry to come in late on this, but just last night I saw another decal on the back of a car with cartoon people spelling "O-H-I-O" with their arms - only this one also had the letters (and hyphens) under the people in a large red font. Thinking of the issue a different way, I wonder if Ohio couldn't get OSU's trademark rescinded. If not, maybe I'll apply for a trademark on the image of people using their arms to look as though they're spelling "O-H-I-O S-T-A-T-E" (the "E" might be a little tough).
Good luck with that!