shivamparikh - Top 10% only applies to Texas graduates. If you're from a different country but are still graduating in the top 10% of a Texas school - you're just not a citizen - then you would be automatically admitted as well.
And kids in the top 10% (at least in my school) are trying compete not only for their major at UT, but a spot in Honors. Also kids in top 10% are also the ones who will apply to Ivy League schools - so they won't all be slacking on their SATs. But I'm sure the law does give a lot of top 10%ers an "OK" to slack.