“However, the applicant pool for those elite schools probably contains at least 10 times more of #1 compared to #2, so the rate of admission for #1 is very likely to be lower than for #2.”
Not sure I agree with this. From what I’ve seen there are plenty of examples of student #2, but the colleges don’t tend to value or recognize the methods in which they demonstrate their potential. Or… the colleges do understand and recognize those demonstrations but also are realistic enough to understand that the college budget only allows for a certain $ limit on financial aid.