"Time Management" by Randy Pausch (Remember Randy?)
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Like most everything else in life, success in grad school depends heavily on luck and networking. Randy Pausch claims to have been admitted to CMU because he knew someone powerful who could vouch for him, and that's actually quite common. Most graduate admission committees consider a glowing recommendation from a successful researcher to be far more important than a standardized test result.
You can argue that this system was/is unfair, but most people would argue that the outcome is still a good one; after all, Randy Pausch is an extremely successful researcher.
Make it more extreme: if you got rejected to a grad school, but Don Knuth called the chair of the admissions committee and insisted that you -- based on his intimate knowledge of your skills and talent -- were the perfect student for their school, wouldn't they be idiots to ignore him?
I don't want to preach at you, but if you're really disturbed by this small bit of favoritism, you're going to have a really tough time as you go through life. The smart thing to do here is not to protest, but to take note of the phenomenon, and do your best to exploit it to your advantage. Otherwise, you're just pissing in the wind.
(You can be as fair as you want when you run the show.)