If you drop one AP, you will still have 7 APs, which is plenty. 8 APs isn’t necessarily going to be more impressive than 7. Colleges don’t actually need to see you winning an AP arms race. If it were down to you and another very similar candidate, and that candidate had physics and you didn’t, and all other apsects were evenly balanced, (of course you are unique, but when it comes to selective colleges, I am sorry to say there will be many high stats candidates with similar apps), then I would give the edge to a student with physics. Why? Becasue physics is hard. It requires a lot of effort and thinking. It helps fulfill the basic American ideal of the well-rounded student. IMO, with the schools you are aiming for, I encourage you to get physics into your schedule. Take H physics if you can. It won’t be easy,but it shows rigor. Good luck.
P.S. Most colleges do not care about rank anymore. Your grades will show that you are third in the class, along with the high school profile. That is impressive.