I too have lived all over the world and seen the advantage BYU has. I have also lived in the Salt Lake Valley and seen the same advantage for Utah. Lots of very bright and capable students want to go to the U because their parents, peers, or church leaders have pushed that message pretty hard. Utah is a fine school and these students get a fine education there.
What is important to remember is that academic excellence isn't simply a function of your applicant pool. Programs have to be good to attract and keep quality students. Do you think that if BYU did not provide these students with a quality education that it would continue to enjoy these advantages?