I'd say it's like 50/50. Lots of people are from Chicago, others are from michigan and iowa, etc. I'm personally from outside the midwest, and i have plenty of friends from florida, maine, california, texas, etc etc.
Note that IL wasn't the highest ranked school i got into either. But i really liked the school, the town and the people, not to mention the price. I plan to go back home when it's over, as do lots of folks. It's nice to know that Chicago biglaw is out there as an option though.
On that note, the folks who are set on biglaw are mostly planning on staying in chicago (from what I hear, top 10% is totally portable nationally, top 1/3 and you're pretty much set for chi-town; and 60%ish of the class getting solid near-biglaw chicago firm jobs). Since I'm looking for a mid-size/smaller firm job, I'm not too concerned.