Batavia: With all due respect, I disagree. In fact, check out Princeton Review on line. Log on and locate any college/university, then click on their admissions section. At the bottom of each page, it will show you the rank of importance for candidate selection. Almost every single one of ranks grades/secondary school record first. In fact, for some colleges/universities, standardized test scores aren't even second on their priority list. Or better yet, call a college admissions officer and ask them what they rank most important. Bet their answer is "grades first".
Sizzle: Wake Forest is not the first to do this. Gettysburg made the same announcement last year, and I had heard that others were considering it (if memory serves, Bucknell was also considering). If I had to guess, it might have something to do with the problems the College Board was having with score reportin, etc. Recall the nationwide problems with incorrect score reporting, etc. last year. But that is just a guess.
When it comes to college admissions, the admissions officers are very much like college baseball coaches and pro scouts. They know the schools in their regions like the back of their hands - they know the academic strengths and weaknesses (actually they know tons about them - demographics, etc.) of each school, whether grade inflation exists on the campuses, etc. They make personal visits to many of their schools every year. So they are very prepared and competent to adjust the grade factors for the various high schools.