The basic premise of the problem stated by the OP is correct: lower admittance rate -> greater number of apps to selective schools by a common pool of applicant -> lower admittance rates -> fear of getting rejected -> more applications as a vicious cycle. The US News and World Report rankings helps perpetuate the cycle as well. As much as I like the UK idea, I am a free-market person and believe that eventually, market forces will cause change, since the current model is ultimately unsustainable.
The ease of applying electronically has exacerbated the problem. By illustration, back in my day, when dinosaurs roamed the earth, it took some effort just to get a physical application. Then, the application needed to be manually completed, preferably with a typewriter, stuffed into an envelope and mailed in a timely fashion. To do this procedure for more than a few applications was impracticable. Therefore, we applied to 3-5 colleges max.
One can easily see that over the past 10 years, the total number of students applying to college has remained rather flat and the capacity of the top schools has remained steady; however, the numbers of applications at each school has roughly doubled.
For example, in 2005, Northwestern University had 16,221 applicants and admitted 4,819 for an admit rate of 29.7%. 1,952 student enrolled for a yield of 40.5%.
In 2015, Northwestern had 32,122 applicants and admitted 4,248 for an admit rate of 13.2%. 2,018 enrolled for a yield of 47.5%. The numbers of applicants is 35,000+ this year.
So, ten years ago, a strong applicant whose 1st choice was NU would have had a reasonable expectation to be admitted. He or she would likely have applied to an Ivy or U Chicago, maybe another school similar to NU and a couple of safeties, for a total of 4-6 schools. Today, reasonably, the same student would fear not getting into NU and apply to a host of other similar match schools like Duke, Vanderbilt, Notre Dame, Carnegie Mellon, JH, Rice, WashU, etc., then apply to a few Ivy’s for good measure and two safeties for a total of at least 10 schools.
The emphasis on ED may alleviate a small portion of the chaos, but not much. More and more students will be wait listed and subsequently admitted as yields from the RD go down. Eventually, I believe that more well-qualified students will give up on the stress and look to quality liberal arts colleges, which would probably be to the benefit of many students and their families. Also, I think the universities will implement some method of dealing with the issue that will eventually improve the process, although I could be wrong. I doubt that more complicated applications are the answer. They will simply make it more time consuming to read each file. As an anecdote, the Stanford application had a multiple short essay prompts and numerous personal information sections, yet we all know how many students apply to Stanford.
Unfortunately, for my son this year, and my two others who will be going through the process over the next 4 years, the process is a chaotic mess! Heaven help you all who endeavor to gain entrance to the hallowed halls of elite universities!