recruiters want qualified kids who will matriculate. Your generalization is too blunt. Colleges want great kids regardless. Top colleges can and often find great kids in both categories. In my opinion, a student attending an academically challenging HS is in a better position, wherever they attend.
This depends. A lot of great schools don’t report rank; that means, among other things, that colleges can accept students who aren’t at the very top in GPA without hurting the “% of students in the top 10%” metric.
Hard to make generalizations, because there are so many factors, but from what I have heard/observed, if you are talking about very selective colleges, then the kid from Option A would likely have the edge. One reason is that colleges could feel more confident that the student is well prepared and can handle the rigors of college
Since you are not in Texas, class rank probably does not have the oversize influence for you that it does there (Texas public universities admit primarily by class rank).
Which is better can depend on the actual academic offerings at each school, and how suitable they are for the student in question.
I agree with posts #4 and #6 that class rank isn’t as determinative as it has been as so many schools don’t rank publicly. However, guidance counselors and teachers still must indicate something akin to rank in their recommendations.
The final answer to the OP’s question is this: the tippy top best high schools have cemented long term track records for college admission, so they get in a disproportionate number into the most popular universities. To balance it out recruiters like to find “diamonds in the rough” at below-average high schools, and yawn at all the unhooked kids from those regular high schools.
Would I put my kid in a dangerous urban high school just to get her into an Ivy? No, I will stick with our “boring” suburban one.