You've also got to realize that within each class, you are only competing for a percentage of the seats available. I, as a white male, am not fighting for any seats allocated to international students, females, or minorities. I am also not competing with Wall Street dudes from PE or IBD.
My only real competition is similar military applicants applying to a school. Since the schools are looking for a diverse makeup, they can only select a fixed amount of various industries, ethic groups, and international candidates. Your odds inside your group are increased by your GMAT, etc., but if you are an IBanker, you probably need to score higher on the GMAT than I do because your background is more common and you have (probably) a higher intellectual pool of people vying for the same seats.
So....that should explain a lot of the BS that seems to occur with less qualified applicants getting in. Yeah, you might be much better qualified than I am or someone else, but if your pool of seats has been maxed out and my pool of seats hasn't, I stand a much better chance of being excepted.
This also makes for the application process being much more of a game of chance than anything else. Depending on the popularity of MBA's, economic conditions, people applying in your particular year, and what you decided to do for the past 5 years (plus college) all converge to give you some random chance at getting to Harvard.
Now if you're not breaking 650....this theory might not fit your mold as well regardless....