My take on this is that selecting a residency program if you can go anywhere is some compromise among these three things:
Location - Where you would enjoy willing. For some people, that is only one place due to family reasons, in which case my other two factors don't matter.
Prestige - How smart you'll feel to work at said program, and how the program's reputation will influence your future in terms of job interviews and fellowships. "University program vs community hospital" is included in the program's prestige.
Personality - The real "happiness factor" which includes whether you think people are nice at this program, whether you'll be treated respectfully as a resident, what the work hours are like, and so on. Sometimes you know the least about the program's personality before you apply and interview, so you end up choosing your initial list of programs based on location and prestige instead.
There is probably just one fallacy with avoiding programs that haven't filled at one point or another through the match. In my field (anesthesiology), some of the MOST prestigious programs didn't fill in the last couple of years, presumably because they simply didn't rank enough candidates in their rank list. Alternatively, one year a program filled NONE of its spots because the secretary uploaded the WRONG rank list to the NRMP match! So MOST of the time a program not filling is a warning sign, but not always.