U Rochester used to have the same policy, but for as many courses you'd want to retake. The earlier grades AND the course entry itself would just *disappear* from the transcript. Withdrawals in the first several months of the course would also fall off the transcript, and completed incompletes would never show an "I". The school did this so students could experiment more with their studies, and surely to help beef up students' transcripts.
So many people retook courses for better grades, weren't as concerned about potential grades when choosing electives (pre-reqs didn't mean much then if you were determined), and often withdrew from courses. They were just working within the system, after all. Then when they applied to med schools, some would be screwed, while others would choose just not to report the re-taken, completed incomplete, and/or withdrawn courses, since there was really no way for AMCAS to find out (a good reason to request to see your premed committe letter), flagrantly in violation of AMCAS' policy, but I don't blame them, since consider the non-cynical applicants -- if a school has such a policy, and if you don't know you'll be applying to med school or don't meet with a premed advisor when you're 18, 19 or 20, then it seems ridiculous that some org could tell you that it doesn't matter what your school policy is (e.g., a school's grading policies in general cannot be over-ridden!), it doesn't matter if you took advantage of your school's system, you're just screwed.
URochester rid the policy in the early '90s due to pressure from a variety of educational orgs and accreditation boards, and about the same time the med school started requiring the AMCAS app 😉.
-pitman
