This seems likely to end up being ugly. For example wealthy people could buy or rent addresses in "adverse" neighborhoods, or charter schools might locate offices there, in order to attempt to improve scores on this metric. At the same time this won't be able to identify many adverse life circumstances like abusive parents, cancer, etc. What it does do is outsource components of admissions decisions the colleges may…
Why are nice neighborhoods more expensive than bad ones? Why are good school districts more competitive than bad ones? Why do parents go to great lengths to get their kids better opportunity?
There will always be motivation to find the best ways to "play the system".
Also, what actually shows if someone is a good student or not?
A student with lower adversity could still have immense pressure if their family has sunk so much investment into their success.
For example, there are Asian parents I knew that had their kids regimentally studying for the SAT since age 12 like they were practicing to become professional athletes. Their parents left their entire lives behind to come to America and work their way up for the sake of their kids getting into a good college then getting a good job.