So after that first year, does the curve get harder with all the dummies failed out or does it get easier with the smarties all transfering?
It would not be 1/3rd of the total credits. Closer to 1/5th. The summer class schedule is more condensed and thus the 7 credit maximum limit. The fall/winter semesters you typically take 15 credits. Also, the more credits you earn the less impact a bad grade has. Thus bad grades arising out of the 3rd semester will be softened and therefore not much attrition shall arise. My T4 = UDM.
The good thing about insane attrition is that it brings a sharp focus to the task at hand (lawyerly analysis on exams) . Even though academic attrition is mostly urban legend, it certainly exists here and keeps you scratching and clawing just to keep your head above water.