I don’t agree with this. It is a reverse positive feedback loop designed to lead directly back to your state’s flagship university where teaching ability is minimized and there is every incentive for faculty to “publish or perish” in order to rise in their departmental ranks. Using that criteria, the University of California at Berkeley would be every Californian’s first-choice and yet the entering classes of dozens of colleges across the country are full of Californians who think otherwise.
Needless to say, there are hundreds of colleges that manage to balance teaching undergraduates with a tone of scholarship and academic rigor. If you concentrate on fit, you will enhance your chances of doing well and achieving your goals.