“How on earth is it okay to take a non-refundable deposit if the student might not even be accepted?!”
It’s not OK. That said, a lot of the schools doing this are large Southern flagships. They are very transparent about the criteria for admission. Most students apply with a lot of information about whether they will get in, and sometimes even about whether they will qualify for the Honors College or equivalent program. So it’s not the same level of obnoxious we’d be talking about if, say, Berkeley asked for this.