The question comes up every year but usually later, when people get admitted. You are actually planning ahead despite some strategy correction.
Part of the application strategy that has been changing and evolvoing is figuring out how to space out schools across R1 and R2. It used to be that the advice was - apply in either R1 or R2 with the best profile and application you can. Lately R2 has been tough for international applicants, so the advice for them is to apply in R1 everywhere (safety and dream).
US Applicants have an easier and better situation (my guess you are closer to US than international being from Canada), applying to a school in R2 does not mean it is NOT your dream school necessarily, esp in this case a Top 5 school. If you have a strong profile and don't depend on getting a scholarship, you have a shot.
As to your question, yes, you gauge it by interview invites and worst case scenario (meaning you actually seem to have a shot at HBS), you pay a deposit. It is not bad for the US Schools, unlike INSEAD and IE that charge upwards $10-15K.... while not ideal, this option presents the most flexibility and pickability. You can hold a spot at Tepper while R2 plays out.... cost of doing business.