I get that OP is a DO, but s/he's got pretty strong stats for psych and assuming there aren't any red flags, it seems like a pretty solid app. I get that the DO bias is still there, but OP seems like they're in a good position. The other thing is that the "independent" applicant stats in Charting the Outcomes also includes IMGs and FMGs, which skew those stats pretty significantly. Unless you've seen some charts/data that I haven't specifically for DOs, I'm not convinced that a DO (especially one with a really strong app) would be all that handicapped to a USMD outside of the few programs that still won't consider a DO applicant. There are other confounding factors as well, like not have Step scores, so I'm a little more liberal with my interpretation of the CtO data for DOs than you're being.
I agree with your general sentiment that over-applying gradually leads to a shift in application mentality and makes things worse through the years. However, I agree with
@Mad Jack that there are some significant benefits for those questioning their application for whatever reason. I applied to around 70 ACGME programs because I felt I was a weak applicant. I currently have 9 interviews and of those 9 only 3 were "expected" interviews (ie, 1 I knew I'd get an interview at and the other 2 I thought I had a great shot because of region/weaker program/school connections). Of the other 6: 2 are newer community programs I probably would have applied to anyway, 1 is a weaker academic program I probably would have applied to, 2 are mid-tier academic programs I would not have applied to (outside my region), and 1 is a program I applied to because "what the hell, I already dropped $1,500 on apps, might as well shoot for the sky" (I'm still in shock I got that interview and am still half expecting to get an e-mail saying they made a mistake). Originally I was going to apply to 40ish programs, but was then advised I should apply to 60-65 because I'm not a strong applicant. Had I only applied to 40, I'd likely have 3-4 interviews right now instead of 9, which would be a pretty huge difference when it comes time to submit a rank list.
So while I get what you're saying, I know I was personally filtered *in* at several places because I decided to apply more broadly than was initially recommended. Also, even if there are stricter cutoffs and more interviews granted to "better" applicants, as long as the top applicants aren't going on 20 interviews and cancelling some, most people will still get plenty of interviews and match just fine. It'll just be a bigger, more expensive pain in the butt than it was previously.