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Aedar hit the nail right on the head above. sakky's talk about how "meritocratic" admissions does not necessarily result in "meritocratic" cohorts is a category mistake. Meritocracy is a term that applies to admissions processes. Caltech could admit a class based on academic merit alone, have nobody accept the offer, and the admissions process would be no less meritocratic.
As for many people preferring a school with lots of girls and biased admissions as opposed to a school with a bad ratio and fair admissions, that's not a big surprise. For teenage boys, few things beat girls, and certainly not "fair admissions".
Then again, while sakky worships the market's wisdom, I'll still take a more skeptical view. Not everything the market wants is good. In the market for intro econ textbooks, what wins is dumb and dumber. Every time you remove an equation and add a picture of an economist, your book sales go up. That's why there are no major intro econ textbooks aimed at people with an IQ above 80. At Caltech, professors who want one have to write their own.
Just one small example of how blindly catering to teenagers doesn't always produce the best outcomes from some more thoughtful perspective.
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