Most of the collateral damage is known to most of us. The biggest is huge publicity machines that turn out glossy magazine as schools fight for something comparable to economic rents. As best I can tell the biggest beneficiaries of these efforts are administrations who then can keep alums off their backs and keep their jobs. Faculties win too thought. Happier alums make for more contributions. I think we would all be astounded to compare most law school's publicity budgets of 1980 with what they are in 2010.
Other collateral damage is the hiring of one's own graduates in order to inflate the employment figures. Why is this collateral damage? Mainly it is a charitable contribution or welfare payment to already well-heeled people.
And then there is the endless fiddling with classes. The standard is to reduce the size of the entering class and admit more transfer students. Or report students as part time.
My reason for this post, since we have hashed this out before, is the impact of the new emphasis on GPA's and LSAT scores. I used to have the view that a state school should provide some opportunity for students who did not have the highest GPAs and LSAT scores. In favoring that view I did not think about the older applicants. What happens to a person who graduated with a 3.3 twenty years ago or more before grade inflation or who has an under 160 LSAT score but had not taken a standardized test for 25 years? The GPA/LSAT obsession pretty much closes them out even thought a 3.3 might be a 3.8 today. That person also offers age diversity to a school that generally admits 22-25 year olds who are wet behind their ears and have no idea what they want to do in life.