The reason for transparency is first to cut down on cryonmism and second to provide better information to applicants on whether they should apply. You might call this proposal "ludicrous " but it is essentially the policy in Nordic countries. And it extends far beyond college admissions. For instance, data on hospital stays, in particular who and how long, is publicly available in Denmark.
Of course you are correct that US law would have to change and that’s not going to happen.