http://www.boston.com/globe/metro/packages/harvard_honors/
This Boston Globe article from 2 years ago has some insightful information on grade inflation at Harvard. In June 2001, a record 91 percent of Harvard students graduated with some type of honors (summa, magna, or cum laude), which was far more than Yale (51 percent), Princeton (44 percent), and other elite universities the Globe study examined.
Yes, the admissions officers are already aware of this issue and do factor it into their accept/reject/waitlist decisions.
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