The distribution gets far more reasonable after most of the initial bunch of people who can't follow simple directions all drop after that first assignment.

I always make sure that my first assignment is due before the drop deadline. I don't make that first assignment worth a lot of points, but it sets the tone for the rest of the class--"If you can't do this, you're in for a rough time in my class." Anyone who stays even if they bomb that first assignment knows what they are getting into.

If you have the freedom to be able to do this then this is great. When I was an academic I was under enormous pressure by the university to never let a student drop out of a course because of the financial consequences. Still had the same problems as you, but I had to figure out a way to get the students through the course. Lots of fun!

Since the projects are supposed to take two or three weeks to complete the Keg party shouldn't be a major factor. Yet it is.

Students always leave assignments to the last night and then panic.

Best classes usually have multitude of manageable last nights at regular intervals.

*Best as in most learning happens to the majority of students.

I agree. I actually made an series of online quizes that just required the student to read through the lecture notes to find the answer before the lecture (the notes were posted before the class). Even though these quizes were only worth 5% of the overall mark, the average mark of the class was 10% points higher after introducing this change. Just encouraging the students to read through their lecture notes before class made an amazing difference to how the students performed overall.