@lifebreath thank you for your post. You capture the essence of what is going on perfectly.
I am sorry for the tough time your son faced. And to be sure, I think this is what happens - often by luck of the draw, someone has to get bounced out of a lot of colleges that they could have gotten into. If we have a bunch of people flip a coin 5 times (analogous to getting admitted to “match” schools), then on average every 32nd student or so missed on all 5 coin flips.
I think you are right the liberal arts colleges and other colleges will also become better known and recognized for their ability to prepare the students. And I hate to say it, but I think that the “signaling” advantage that a most prestigious degree used to convey may fade as colleges become increasingly quixotic in their student selection.