I think the idea of a balanced list is great advice for a typical applicant. But being a faculty kid and having an inexpensive safety in the home institution means you are not a typical applicant.
So I think it’s fine to approach the situation as “We have this wonderful home opportunity, and then we’ll also throw in a handful of lottery ticket schools.” I have seen this work out fine for a couple kids I know (one of whom got into a reach, one of whom got rejected by all his reaches and ended up at the home institution.)
But both of these kids were practical minded, understood the financial situation, planned on grad school, and wanted to save for that. Also neither was in a peer group where comparing admissions for social status was “a thing.”