I remembered the Miami L but couldn't recall who the other loss came against. The defeat to the Canes was the epitome of a "Good" loss if there is such a thing but you are right, losing to USC was the inexplicable big dream killer. Still, it was a helluva season and clearly PSU's best one between '86 and '94.
The Fiesta Bowl is terrific and Penn State has some great history there but it felt like that '91 team had the potential to play for a national title so perhaps being in Tempe was a bit of a consolation prize that season. Certainly, a great consolation prize if you ask me!