You say it is infeasible for standardized tests, but why? Is it that much harder to give 50 students and extra hour than to give 5 students an extra hour? Or just design the tests so that there is ample time to complete them without extra time.

But putting aside standardized tests, in the context of this discussion about Stanford, I think these accommodations are being used for ordinary tests given for classes, so Stanford (or any other school) has full control to do whatever they want.