Yes, that's essentially the same thing I heard about Kellogg (as a back-up to Harvard, Wharton).
Yield is directly related to admission percentage, which is even more closely tied to the perception of quality and prestige. Harvard, for example, has a student body of 900 and must admit about 1000 people to fill their class (yield of about 90%). Chicago, on the other hand, has a class size of 550 and must admit almost as many people to achieve their much smaller class size. Thus, the admit rate at Harvard can be kept mighty low, given the volume of applications.
I believe that it is a good suggestion to not list other schools that the school you are applying to has a natural inferiority complex to (NYU to Columbia, Berkeley to Stanford, etc.) Of course, you must back it up by showing in your essays that you have good reasons why this particular school is at the top of your list. If someone from San Francisco lists Berkeley or Stanford as their first choice that makes sense, but Cornell as their first choice, they will have to explain why and convince the school it isn't just a back-up.