Standardized tests are in general a stupid and nearsighted way to judge students and intellectuals. People have good days and bad days, alert days and sick days, that is the nature of humanity... can't pin some kid's future on the fate of one single day with so much variance involved.
Example: I had to miss a 2nd attempt at an ACT test on Saturday, February 9th, 2013 because I came down with a bad cold on Friday night. My previous ACT score was 29 and my illness cost me an opportunity to achieve a score of 30+. I had it scheduled from months in advance (only way to avoid being waitlisted) and my grandmother was pretty upset because it wasted her $50.
As far as your second sentence, you're accurate, but I'm not sure if you know but most schools in the USA already weight grades/GPA (which also determine class rank) based on regular classes vs. Pre-AP/Honors vs. AP/Dual Credit. Regular being worth the actual grade value, Pre-AP/Honors being worth your grade +5 and AP/Dual Credit +10. At least that's how it worked at my school. So the students who loaded up on AP/DC classes got rewarded with a significantly higher maximum grade average than those who took regulars.
Compe ion does vary from school to school, but the argument there is that you can't just reward rich, mostly Asian/White schools in California and Massachusetts, Connecticut etc. for having better schools and GPAs and offering more AP programs and the like as opposed to, say, the majority-black and majority-Hispanic schools. Class rank is an excellent determining factor because it gives everyone a chance to do their possible best given their cir stances, be it rich or poor, Asian/White or Black/Hispanic.