When I was taking an education theory class we had to do simulated admissions. We had to do three applicants every ten minutes, which works out to just over three minutes per app. In that amount of time you can quickly scan over the grades and SATs, and maybe read the first paragraph of each essay if you're lucky. The other thing I learned is that the real admissions officers got statistics updates twice a day for the average GPA and SAT score, and also the projected US News rank. This means that whether or not your grades and SATs were good enough depended largely on whether your app was read before or after lunch, because what it took to get into the college completely changed every time they were handed the new report.
For low income minority students there was an option to set the app aside for a second reading in order to learn more about the student's situation and if there were an ameliorating factors, but for the rest of the students the admissions officers were expected to make a decision on the first pass after the three minutes.
Athletes also largely got pre-approved by the academic department they were applying for, so they pretty much knew whether they'd be accepted before they ever applied. The flip side is that they only got an edge in admissions if they applied early decision, because if they were going to bring down the average GPA then they had to bring up the average matriculation in order to not affect the overall US News rank.
I think it's one of those things like eVoting. That is, people with no CS experience think eVoting is totally secure whereas CS experts know it isn't. Similarly, I highly suspect that anyone who thinks getting admitted to an Ivy shows a certain baseline level of respectability has never worked in admissions. I'd guarantee it.
As for the importance of college GPA, if you want to see something funny then apply for a wall street job. If they ask you what your GPA was in college, ask them how GPA correlates with alpha. :-)
The craziest thing was that Google did a massive HR survey and determined that there was basically zero correlation between college GPA and value created for the company. Because of this they decided that they would give jobs to five or six people with sub 3.0 GPAs each year. Well if there is little or no correlation, why should it matter what GPA is at all? I suspect the psychology behind the Google hiring process has a lot in common with the psychology of female circumcision. That is, it was done to me so it must be a good thing. And if it's a good thing, then by definition it must be good to do unto others.
edit: fixed a few grammatical errors