>The US has a huge delta between its great universities and its mediocre ones.

Like any other country, yes.

>But altogether the amount of people who can pass a code screen in the US is pretty low. If you ever interviewed people for a software position in a big tech firm, you'd realize this.

Compared to India? Or is it fine to lower standards of quality when you are paying an 8th of the cost and it turns out most people don't need to be from MIT to contribute?

That's perfectly fine and dandy. But that's not what H1Bs are for.