It happens a lot for various reasons. Admissions people aren't that good at their jobs, good ol' boy networks, outright cheating on standardized tests (this is a huge problem in Asia), and more than a few "dumb smart kids". Overall, good B schools (well beyond the "top 5", which I'm pretty sure consists of at least 10 schools) are full of pretty sharp folks. Some even brilliant. But quite a few dullards as well make it through the process.

Well, those unimpressive people get the needed work experience.

The "work experience" component of MBA admissions is socioeconomic. It's often worked out while these kids are still in school, that they'll do job X for 3 years and then get sent to Harvard MBA school. And while some rich kids are also impressively intelligent and creative, those tend not to be the rich kids who go to MBA school. So you get a mix of reasonably impressive (or lucky) middle-class students and unimpressive rich kids.