The football recruiting process has expanded to include a ton of different elements. I think this is due to the internet in large part. But in the present day, so much more than high school competition goes into determining a recruit's ranking.
There are combines, camps, film, and I even think the internet in and of itself plays a role. Social media and the recruiting websites like scout and rivals all shape the industry of college football recruiting. It's hard to picture those times when colleges recruited high school players solely upon the resources of going to watch HS games, maybe some film, and newspapers.
The modern recruiting formula results in a high level of exposure. Every college fanbase knows so much about their teams' players before they even play. It's a little weird if you really think about it.
In terms of the rankings and going after the "5* recruit", the five star recruit isn't always a very good player. I don't think the current system necessarily promotes a lot of busts, but it has shifted the emphasis from purely football to a more complex equation. The ranking people place so much emphasis on athleticism and physical development that often we see great athletes ranked highly and never amount to anything because they don't have any football skills or a real position on the field. For example, the pundits often fall in love with guys that don't fit at any position but have sort of a basketball body and athleticism, which doesn't mean they're the next Jimmy Graham.
There are also a ton of guys in HS, with incredible physical development, that don't progress much and never "live up" to their five star rating. And you can't blame anyone for rating a kid 5* when the recruit looks like an NFL running back as a senior in HS.
This plays into the hands of teams like Iowa. If you can't get the highest rated recruits, you should recruit:
really good football players that are well coached and have specific football skills, players that have huge potential and room for physical development, and guys from small towns that slipped under the radar.
IMO, these are three things that Iowa has done pretty well. The star system is an invention and college football existed for a long time without it.