As someone taking boards in a couple months I'll weigh in on what factored into my choice. I think the demographics of this board skews toward the more academic and competitive aspects of psychiatry, while (in my opinion) the lurkers may skew the other way. Of course, this is only my assumption. I think in this sense it's easy to make assumptions that all applicants may share some similar values in their career goals, which may or may not be the case.
Currently, there are 182 allopathic psychiatry programs. I'd venture to guess that roughly 1/3 to maybe 1/2 of these really ever get discussed here much from my perception (could be way off). This leaves a large amount of programs that fill every year (whether it be through match or scramble). In essence, most people aren't matching into a lot of the programs we may conjure up when we come here and think 'someone wants to match into psychiatry'. Naturally, many people will also want to land in some more competitive places, hence the fact that they are competitive. In this context then a lot of what's been said is pretty appropriate about making sure you take each opportunity to, at the very least, match up with others you're competing against.
As far as the story of the bad applicants having not taken USMLE, I'd say that using that as a screen would probably be pretty sensitive for bad applicants but not very specific. What would your thoughts of them have been had the only taken the COMLEX but didn't have multiple rotation failures, didn't have a superficial interest in psychiatry, didn't have bad letters, and had given thought to where they would be in the next ten years? Not taking USMLE is the least of these problems. Of course I'm sure you know that and were just pointing out that in addtion they didn't take it, but as I was saying senstive and not specific.
I think the biggest problem we have is that the advice isn't getting translated. I've mentioned before that if you go through the ROL threads for the past few years you'd think only 20 programs exist. I'm not saying this as a fault, just pointing out that the demographics here certainly aren't representative. In my experience, those who were comfortable enough going to a DO school to begin with are also much more comfortable not going to a huge academic center and a more comfortable in the midwest (since it's also more likely they went to school there) and/or in community programs. I'm only saying this as a generalization, since there are also obviously many DOs that want to match into bigger, more competitive programs, and on the flipside there are many at competitive MD schools that opt for a smaller program or even what isn't considered a "sexy" location.
You could tell a 6'1" basketball player entering the upcoming draft that teams are really looking for some help inside and grabbing rebounds and that would be to his benefit to showcase his rebounding and work on his post-up game. Surely, this wouldn't hurt his chances and could maybe get him a bit of praise, but let's not kid ourselves in thinking that someone is going to draft him to play power forward. If they're looking to bolster their frontcourt, they're going to draft a big guy, and not a 6'1" point guard, no matter how awesome his rebounding and post skills. If a program values a solid USMLE score and won't look upon taking COMLEX only very favorably, it's likely that the bigger uphill battle is that you're a DO -- not that you didn't take USMLE, much like our 6'1" rebounding machine. Of course taking and doing well on the USMLE will give you a better chance at these places but by how much? Our point guard friend can increase his chances of being selected higher by a team looking for a rebounder by showing his rebounding skills as a point guard, but by how much? My advice to him would be to showcase his speed, footwork, ball-handling and passing to catch the eyes of teams looking for a point guard. Afterall, he probably doesn't want to play power forward anyway. There are exceptions, obviously, as I'm sure Don Nelson wouldn't have a problem starting a 6'1" power forward.
There are a few different reasons why, as of right now, I am not planning to take USMLE step one. The first is financial. Our school budget is created for a single individual. They will not allow or approve anything above the standard budget given to each student. I've tried getting other educational loans independent of the school, but in the end it proved to be a waste of time since they required the school to approve it, but I digress. I'm supporting my wife and two children on a budget created for one person. The extra $600 is though to poney up for something that I've deemed to be of too little value for any added benefit it may bring according to my own personal goals. Due partially to my circumstances in addition to a few other factors, the programs I'm looking at aren't at big academic centers and aren't in 'desirable' locations for young single people.
Often times I hear about having "good" board scores only to later find out that what we're talking about is >210 or sometimes even >200. If it's so important to a particular program that I fork out $600 for a test where a nationally sub-par performance would be considered proving something, then no thanks. If things change, I reserve the option to take step 2. But as of now if they think, aside from everything else in my application that I'm confident of, that me not taking a test with a 200+, then I don't think we're going to be that good of a fit anyway. I understand some may disagree with this reasoning, which is why I can say I'm comfortable not being considered at these places with no sweat off my back. Again, if things change and my goals (which are largely static due to having a settled family) also change over the course of the next year, then I'll take step 2.
I guess in summary what I am saying is that there are numerous factors that can go into the decision and simply implying as a soft rule that the USMLE should be required in order to be competitive (which may or may not be the case depending where the applicant is considering applying and what their goals are) doesn't always hold true. By the same token it also can't be said as a soft rule that the USMLE is not required since, again, this depends on the individual and what they are looking for rather than having us superimpose what we personally are/were looking for. Conclusion: my belief is that it is not as much bang-for-your-buck as is being implied, since programs more anal about having a USMLE score will likely be just as anal about you being a DO graduate.