You don’t need to be a good school to have notable alumni. They aren’t “producing” anything. Ive league schools use the same curriculums as the unknown university I went to, and from the lectures I’ve seen, the teaching isn’t any better either.
They just reject anybody who isn’t a well-connected, hard-working high performer, so it makes it look like they are producing notable alumni. Good material in -> good material out.
And, yeah, you can discriminate pretty heavily and still be selective within the remaining groups you aren’t discriminating against. It’s not strictly either-or.
And, who knows, maybe they knowingly discriminate against lower/middle class people and against asians because they perceive those groups will struggle more after graduation due to their disadvantages (targets of racism / lack of connections / lack of money) and will not make the school look as good?
Having a brilliant son who would have previously been discriminated against by Harvard’s admission process, I’m happy to see explicit race components removed. However, should he choose to apply and go (mostly to be connected to opportunities he otherwise wouldn’t have), if he leaves with a degree and nothing more, what good is it? The one Harvard professional peer I had came from the middle class, ended up at the same FAANG as me (who is just about as unconnected as one could be), and burned out in the process. Sample size of one, but it wasn’t an inspiring story.
You ought not to think of it as a rigerous academic forging fire for the meritocratically selected brightest minds, but rather as a finishing school for America's elite.
So long as they keep producing presidents, diplomats, CEOs, senators, and so forth, they will continue to have a great reputation.