Tiebreakers are always confusing but based on how I read it, in this 3 way scenario where head to head doesn't work, then games against division foes comes next at which point Iowa would be eliminated due to the loss against Purdue. Then it would go to head to head between Minnesota and Wisconsin which would lead to Minnesota winning the division due to head to head.
But i hate tiebreakers because they get so friggin confusing.
The Big Ten football championship will be decided by a game played between the two division champions. A team or teams that are not eligible to participate in a postseason football bowl game as a result of NCAA and/or Big Ten sanctions shall not be eligible to participate in the Big Ten...
bigten.org
Edit - as was pointed out by others, Wisconsin lost to Penn State also so if they lose to Iowa or Minnesota they have 3 losses and would be out of this mix.