Since you raised the issue, I'll just ask how you'd propose to accomplish this. Certainly it's simpler to admit people to an already good school who wouldn't have been admitted otherwise (and, not necessarily because they're not qualified -- the number of students at any elite school is vastly outstripped by the number of applicants).

I would say the potential payoff of improving "lesser" schools is far greater than simply letting different people into elite schools. That just seems obvious by the fact that there are way more mediocre state schools and other C and D list schools out there than there are Stanfords and Caltechs. What I doubt is that it's even possible in a practical sense to raise the bar on the non-site schools to an extent that would offset the overall effect of elite schools in aggregate on people who attend them. In other words, I suspect that opening up elite schools is simply the more practical option, however I am not an education policy wonk, so I am totally willing to be convinced otherwise.