From what I have read and heard, graduate schools are really interested in research students do as undergraduates. As an engineering student, I have heard that graduate schools are not too interested in industry experience. However, I am curious if they are interested in hearing about industry experience if it is highly research-focused. Does anyone have input on this?
Yes! Especially in engineering.
Particularly at the undergrad level, the skills you learn by doing research in industry are just as valuable as the ones you can learn in a university lab, so by all means gain and talk about those experiences.
For engineering, industry experience is valuable too so I agree you should use it to your advantage.