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Definately apply to UPenn.. I felt that there were no such "ethnic clause" during my interview, it's all a big urban myth! (I am not an Indian!)
The feel of the interview was that they were looking for someone who would actually benefit from the PASS program. They wanted to seek out candidates who were academically and mentally prepared to go back to the basics and be students again. In other words, they were seeking candidates who could survive their program (which sounded pretty intense). It's no walk in the park, right? Financial stress, family stress and academic stress... they will all affect your performance at the school... your discipline and your motivation will be important. The admission committee wanted to see that, I guess. So many people I met at the interview were only interested in showing off what they had done or their Board scores. They weren't talking about why they felt they were the right candidate for PASS.
meggs, you should definately apply and see what happens! When you get an offer of an interview, go with a smile. Be confident (they are very nice people) and be honest with yourself and speak why you want PASS to pick you. They've interviewed so many students so far, I guess they will be able to pick someone repeating standardized answer over and over again...
From what I've read so far, your posts sound like you have a fair chance!! Go to it and good luck.
2ed