Anyone read the new 2006 US News Graduate School Guide yet?
In the Law section it has a very interesting article on transfering up tiers. It states plain as day that the law schools let students in their law school as transfer students they would like to let in as 1Lers, but they don't want to hurt their numbers and their US News rankings so they don't accept them initially.
They are flat out admitting they are strictly number whores who aren't looking for the best all around students - just good numbers. Down the road they try to balance the class out with good all around transfers.
When you think about it though it is rather amazing how US News totally can make or break a law school's reputation - especially the bubble schools 12-18, 40-60, and 80-115.
Makes me wonder how the law schools competed for talent thirty years ago. I guess they just went by the prestige factor.
There are several problems with your post.
First off, if you read One-L (written almost exactly 30 year ago), you'll see that the top schools then also focused on LSAT and GPA.
Top schools don't focus on numbers primarily for USNews -- they do so because it's the easiest way to predict law school aptitude.
I also disagree that USNews has that much affect on reputation. Most schools appear to have fairly consistent reputations, regardless of their ranking. (Chicago still gets much better reputation ratings than NYU, despite being behind them in USNews for years.)
I haven't read the article, so I don't know what it really says. However, you can't exactly take a few isolated quotes and conclude anything about the entire law school admissions/transfer process. (USNews may have their own incentives to exaggerate their own influence, after all.)
Ultimately, LSAT & GPA are the best predictors of academic aptitude available (though they are far from perfect). Beyond major, undergrad, etc., I'm not sure what else schools can look to to reliably determine who will really be a better or more "well-rounded" candidate. Transfer candidates have already excelled academically somewhere, so they've at least proven themselves.