I think it's more likely that US seniors are overestimating their competitiveness, since it appears that a substantial number are willing to put their necks out for a prelim year instead of choosing another specialty. I'd bet that every single one of those people would have widened their net if they had any kind of realistic idea of where they stood among the applicant pool. But since the programs fill with FMGs (who knew already that they had an uphill battle and applied widely), they don't have that opportunity. And where do most people get a sense of how competitive they are? From the faculty they talk to and the people they ask for advice.
It's one thing to get good advice and fail to match because you ignored it, but somehow I don't think that's what's happening.
1) Osteopathic Graduates are not considered US Seniors. I am a graduating DO, and matched into a categorical, allopathic general surgery program, university based at that.
2) As for FMG's, i'll tell you what they told me at one University program in the midwest.
"We take one FMG per year, usually from AIMS (all india institute of medical sciences). Those residents have double 99's on their boards. They work hard, are humble, know their stuff, and crush the absite. In my opinion, they are the ideal surgical residents."
There's not too much to argue with there. The indian educational system was founded by the british. All of their classes are taught in english, granted many of them have some problems with english proficiency. You can't argue with numbers, and a lot of times, it's a numbers game.
3) For the most part, every FMG I interviewed with told me that they had applied to EVERY SINGLE GENERAL SURGERY PROGRAM ON ERAS, for both categorical and preliminary. Why would you take a, "graduating US senior" just because he has an MD from the US of A, when you've got a guy who's not going to act like he's entitled to anything with better numbers who's going to work harder?
If I were a PD, I wouldn't discount FMG's (or DO's) just because of where they came from. I'd look at everyone based on standardized comparisons (board scores), see what other people had to say about them (LOR's) and then talk to them and make a decision for myself.
Just one man's opinion.