This is actually true at any school. At large state schools, there are professors doing real research. The difference with the ivy leagues is very few students actually seek these experiences out. (I was one of four undergrads applying for a paid research position during my Big School CS undergrad. I got it as a sophomore because the competition was weak.) I still would have had a better experience at Stanford or MIT, but I think it's more a peer effect.

But instead that produced this arms race of people seeking lots of extra academic experiences purely for the sake of getting into college and then burning out and not wanting to continue once they got there.

This is very true. I was very surprised how many of my friends dropped their extracurriculars in college. The only friends who stayed in music were the ones (like me) who went to large state schools - in essence because we were doing it for it's own sake. Turning college admissions into an extracurricular quest (in addition to a "Don't dare get a B" risk aversion) seems very wrong.

My sense is that this gets sorted out in the end. After a few years of work, all the nonsense about school admissions is gone.