“it keeps selective colleges diverse with students of varying true capabilities.”
You are assuming that there is any meaningful difference in “true capability” among students who attend, or who ought to attend, schools that are ranked 5-10 spots higher. That’s the gap between, say, Duke and Vandy. There is no meaningful difference in the qualifications or capabilities of the students there, and that would be true even if there were no independent counselors. The independent counselor is helping the student stand out in a pool of equally qualified kids. These top schools only differ in the number of outstanding students they turn away, not in the merit of the outstanding students they admit.
Shaking my head at the idea that any process could distinguish the “true capabilities” of students who belong at Chicago vs. JHU or Dartmouth vs. Notre Dame.