Absolutely and I don't seem to understand why you think a student at a top university isn't capable of performing meaningful research and obtaining a strong, supportive letter? Or are you trying to say that given two equally supportive letters, you wouldn't care if the writer is someone very well known in the field and perhaps someone you know vs someone relatively unknown in the field? Perhaps that's the case in your particular field (which you haven't shared so it's hard to comment) but it certainly doesn't generalize to other fields, stem or non-stem.
Grades in general are meaningless when applying for a job. But for many competitive professional schools, perhaps not in your field, a 3.7 GPA at Harvard is not the same as a 3.7 at [unknown school]. You can rationalize it all you want, this is just the reality. And if you think obtaining a 4.0 at say, a community college reflects the same level of course mastery and effort as a 3.7 at, say, MIT, you're not fooling anyone.
That may be the case in your line of work, but elsewhere, the cache of the top universities is still alive and well.
I think we have a misunderstanding here. Students at top universities can and do perform meaningful research. But going to a top university isn't a guarantee of that. As for letters, if I received two equally supportive letters, I would try to treat them equally. But my point is really that if I received a strong letter from a small school, by someone I didn't know, but who detailed the work the student did and their perseverance etc, I would weight that more highly than the sort of "cookie cutter" letters I sometimes see from R1 places where labs have 10 or even 20 students all working on little bits of projects. Some R1 researchers are too casual and think their notoriety and prestige should be enough. I want to know what the student did and why that student is being recommended. But any sort of letter can come from any school. It is just that an R1 school does not ensure a student will have that sort of positive experience. My field is computational cognitive neuroscience. I think this does generalize to CS and engineering. As another poster said, CS and related fields tend to have less bias and "networking". I can't speak for many fields, but for the fields I know, the younger the field and the more concrete the discipline in terms of results, the less bias towards prestige seems to exist.
Anyone who takes a 3.7 from Harvard as better than a 3.7 from, say, Michigan, is fooling themselves given the median grades. On the other hand, MIT gives "real" grades. I don't know what the median is, but I am sure it isn't an A. It might be a low B. Again, freshman year first semester is P/F to ameliorate grade stress. So a 3.7 at MIT is worth way more than a 3.7 from Harvard. And we weren't talking community colleges, but larger state institutions (which are very different from CC's). But if a student from a CC had embedded themselves in a lab and had demonstrated perseverance, scientific thinking and acquired research skills, plus they had a 4.0, I would be foolish to not consider them seriously. But I am not suggesting people should consider CC as an alternative to the prestige schools, just that they should look more broadly - there are superb 4 year colleges without research portfolios and wonderful state schools that all produce super successful and impressive students. And many students - depending on their personal style would be better off at one of those rather than at a prestige school. So cast one's net widely and consider many other dimensions beyond "prestige" and research profile. Places like MIT are superb institutions and people there do incredible things. But it isn't for everyone. It is much better that a student find a place where they will thrive, be happy and find their passions. Many students at prestige schools burn out. It isn't healthy and we need to rethink our metrics for why students go to college and what they should get out of college.
The cache of top universities is definitely still alive and well. But it doesn't serve every student at such places well. And, indeed, it might be a negative for them depending on their own personality. So, again, just like audio, don't buy into cache. Do research and look at relevant "measurements" and make an informed decision based on your own preferences and budget.