A couple responses to this:
First, excluding walkons, we have 2 seniors, 2 juniors, and 1 sophomore at the position - and two of those guys are converted from where they were recruited (Colbert was a DB, Wade was a RB). Of course we recruited for depth at LB with only 5 guys on scholarship to fill six roster spots on the depth chart, even if the OLB spots are not going to be utilized 100% of snaps.
Secondly, there are a lot of walkons at linebacker right now. Most of those RS Fr are walk-ons. 6'+, 230 lb+ is a good body type to take as athletes, because they can play LB, or FB, or LS, and if they have the length, TE (Dallas Clark, anyone?) or even linemen (Matt Roth, Mitch King, etc), and can fill all kinds of roles on special teams... i.e. they might be good football players and be willing to switch positions and/or play roles that a lot of players might not be excited to play. There was a glut of really athletic tweeners in last year's Iowa graduating class, and if they want to walk on and there's room for them, it never hurts to have a bunch of motivated youngsters on the team. That said, not all of them will be on the roster in a couple years, and it's a toss-up whether any of them has a shot at starting. But it's not like Iowa doesn't have a history of finding good players in the walk-on space.
Finally, the Cash position is a reaction to the spread looks we see. In the past, we've been able to recruit guys who were capable of covering in space, like AJ Edds and Chad Greenway, but I think it's an acknowledgement that it's better to have a faster guy doing that coverage when the other team trots out 3 or 4 WRs, not just for coverage's sake, but to keep legs fresh... a 6'4" 240lb guy covering a 6'1" 190lb guy with wheels all game, you probably don't have a lot left in the tank to hold up against the run in the 4th quarter. But we still need to be able to trot out 'backers who can shed blocks from FBs and TEs when we play the likes of Wisconsin and Michigan St. There will be a place for OLBs at Iowa still. Honestly, we've been recruiting so many good DBs lately, that it makes sense we'd create a position to get more of them on the field, especially compared to the lack of bodies at LB.