Not all AAU members are that selective. Indeed, some of them are less selective enough that it is no surprise that there are many students who need remedial courses. Are the complaining faculty at the USNWR top 20 schools, or at other schools?
Yes, a harder entrance examination like that used in Russia, China, or India could help distinguish the academic credentials of the very top end of the range of applicants, but it would not change the admissions scene for the other 99% or so. As long as we subscribe to the idea that everyone should have a chance to prove themselves in college, there will be less selective colleges (including open admission community colleges) that admit students who are not almost guaranteed to graduate.