Each school is different. Contact the schools of your choice and see what their advice is. In many cases R3 is much more competative because there are more applicants for less spots so you have to have something special. I wouldn't just go by what you heard when talking to people b/c it's impossible to know exactly how they came off in their application. Most people in B-School are "Normal" folks, but typically for R3 you need something more special: Great work experience, High GMAT, High GPA, or just be in a demographic that they believe they need for that class. You never know what they're looking for, but most people and professionals would encourage to apply R1 or R2 if possible. Obviously a stronger app in R3 would be preferable, but if you can put that same app in R1 or R2 you chances might be that much better.