This is an irrational model for evaluating a candidate's talent. The best way to evaluate a candidate's talent is to make them code for you, plain and simple. Many people's motivations in university diverge from their motives in the professional world. Some people will work much harder when the result is a paycheck every two weeks, or when they have to feed a family, or because they see their work career as distinct from their academic career. But for the sake of argument, let's play along with this naive model.

The university they attended matters almost as much as their GPA, as we all know that professors will tend to curve the difficulty of their course to conform to the quality of the students they are teaching.

And you have an illogical attitude towards 3.9-4.0 students. Almost every student who attends an Ivy-caliber school had a 3.9-4.0 in high school. Surely, you aren't implying that the quality of a CalTech CS graduate is lower than the quality of a UCLA CS graduate, because the CalTech students' one-time GPA was likely a 4.0. And you certainly can't be saying that Ivy-caliber students are sheep who blindly jump through hoops.