Your assumptions are wrong. Not to sound mean, but for my game theory class "thesis" I researched factors impacting medical school admission.
(1) Sort of true, but after you factor out the people who shouldn't count, the rejection rate isn't as drastic as it appears.
(2) Sadly(stupidly), this isn't the case. A good deal of people apply due to family pressure or out of a desire to help others, amount to something, etc. Also, there's a reason so many medical schools have a "no exceptions" policy with pre-reqs. For whatever reason, some applicants still think they can get in even if they don't follow the rules.
(3) Yes you can...a 1.85 gpa 16mcat with no mitigating circumstances is not getting into medical school. Also, depending on the school, applicants who start to apply, but don't finish, are "rejected". As a personal example, I never finished my an undergraduate application to Cornell, but I still received a rejection letter.
The game theory behind admission is fascinating. Run a correlation parse over mdapplicants.com and you'd be surprised what comes up. For the most part, people consider slightly above the school average to be the same as "competitive", but this just isn't true.
I should write a book: what medical schools
really want.