I think this is kind of what's happening with Columbia here. For example, Columbia claimed that 100% of the faculty had a terminal degree. Prof Thaddeus (if you read his full blog post) questioned this from two angles. The first was to say it can't possibly be true. The second (which I found more interesting) was: why would you even want this to be 100%? Seems like Columbia has valuable faculty who don't have a PhD or MFA or whatever is the "terminal" degree int he field.
The harm here isn't in wanting a terminal degree for a high percentage of faculty, it's trying to get this to 100%. I'd say that it probably is a good sign, overall, that most of the faculty has a doctoral degree, as this is the main training degree for research and teaching. But the way US news does it, you get more points for 95% than 90%, more points for 99% than 95%. Seems like a lot of harm comes from trying to wring out that last bit, since even if you do generally agree with the value of a PhD for research (or other terminal degree), it does seem like you'd build a stronger faculty overall with the ability to hire 1 in 10 or 1 in 20 based on some other credential.
So much else fits this pattern. Small class sizes.. kind of the same thing. Sure, it's a good sign, but they're only an indicator, not a goal in and of themselves. Low admissions rates, high test scores. All good metrics, but things that can become not just harmful but harmful and maybe even fatal to a university if pursued with a single minded intensity as if total purity in the metric is the goal.
Honestly, overall we just have to reject the US news rankings. I appreciate what Prof Thaddeus did here, and it was a useful and very well reasoned and sourced takedown. But now and then, I realized that there isn't much to be added, just new and interesting ways to say what everyone knows at this point - yousnoozeandworlddistort rankings are pretty well idiotic. I actually think college rankings in general can be useful if managed cautiously and read critically, but this one is just a turkey.