Many of the "elite" universities (Stanford, Harvard, Princeton, etc.) out there have long been criticized for inflated grades. Basically the hardest thing about these schools is the admissions process, once you're in it's clear sailing.
I definitely know at Stanford that you used to be able to drop the class at any time, and you could just retake the class that grade would just replace the Incomplete for the class you dropped. I think that has changed though, since they got a lot of grief for it.
IMO, just go to a solid state school for undergrad, do well, and go to an "elite" school for your graduate education.