Of course, that is still no penalty for the ED breaker, but a dishonorable practice to future students at the high school who have done nothing wrong. If the college does put the high school on an auto-reject list, it should at least do so openly (informing the high school of such), rather than accepting applications and their fees from students at the high school who may not know about the ED breaker in a past class.
If the colleges really want to penalize ED breakers, they should require ED applicants to pay the enrollment deposit upon application, and also force a net price calculator run that saves the input parameters and the net price with the application. Enrollment deposit is refunded if the applicant is not admitted ED, or the college’s actual financial aid is worse than the net price calculator result and the same input parameters were used for the actual financial aid application.