Yes, out of state is very competitive. By law only 25% of the class can be out of state. Therefore, you're talking about maybe 60 slots? Of the 4000 applications this year, I'm guessing 2000-3000 are out of state. From the info I've gathered over the past year, I think I'm at least semi-accurate in saying instate status gives you about 3 index points, which is 3 LSAT points or .15 GPA points.
After all that bad news, the good news is that you have a stellar GPA and they weigh that highly. Your index is probably fabulous -- i bet it's higher than someone with a 3.5 and 168. With an index that high you would think positive things would happen. I think they sent a lareg chunks of letters very recently. How far awar do you live? PM me for more info if you're interested and give me your background. Do you IM?