To agree with you: I've worked with several really brilliant undergrads doing and publishing great research. But all of them were rightfully undergrads. Even if they were actually capable of doing great research, they benefited from the breadth.

If you have bright enough undergrads, you change the curriculum for them within their field of expertise, so that they still get the breadth of things outside it while not wasting time with things they know. You let them not take as many classes, take graduate courses, do more research, take more courses from other departments in related areas but with different perspectives, and so on.

When I was an undergrad, in physics, there was a professor in the department who had done his undergrad there and was legendary, as was quietly mentioned in awe, for not taking any undergraduate physics courses while there; the department had let him skip all of them, and instead take graduate courses and do research.