Grade deflation (relative to other schools with grade inflation) could probably hurt kids applying to colleges that have completely non-holistic admission, or semi-holistic admission where applicants are only considered if they are above a GPA cutoff.
For holistic admission colleges, I expect the AOs can figure it out … at least for HS that send many applicants to selective colleges (such as large competitive public HS, or strong private HS).
For smaller or less known HS, I don’t know. But perhaps this can be explained in a good school profile.