In a general sense they are one data point that might not be terrible. But in this specific case, you are incorrect.
Texas or Alabama offers a 3-star and the recruiting services raise him to a 4-star. This type of thing occurs regularly. That's where recruiting rankings for a team like Texas under Mack Brown become inflated and stop reflecting reality.
Mack Brown was a great receuiter for his first decade or so at Texas. After that he got very lazy, but the recruiting rankings didn't suffer much because the recruiting services were part of the machine.
I think this is interesting because it asked a central question: Is the concern that there is actually a rot at the top of the ranking, i.e. they stop working well when certain top programs continue to skate? Or is it a moment where someone is going to be an outlier, and the fans of the teams that are feel a certain level of exceptionalism (i.e., this is happening to the team is see closest, that must mean the system is wrong, rather than my team being a quirk in it)
So was Texas getting players who were smaller and slower than before? Were those players' offer sheets shrinking in quality? It's all well and good to say other coaches said such and such behind the scenes. They might well have said the same in 2004, but it only pops up when outcomes confirm it.
My theory on this is a different angle, something I call cluster busting. There's a term in baseball called hit clustering, namely, if I have nine hits in a game and the come in two innings, I likely have a few runs, if they's spread out to 1-2 per inning, I have few.
Going in, we assume some percentage of 4-star and five-star kids will bust. Assuming 11-12 schools are in the top fifth of recruiting, math says 1-2 will not be playing at that level. Texas for a stretch might just have been it (focused mostly on the late Brown era. The coaching change/strong era complicates things somewhat). If you run into a mildly higher bust rate than average, it might well drop a team from 10-11 wins to 8-9, which is what happened.
(South Carolina is a great example of this. The hight of the Spurrier era saw a really good run of hitting on nearly every blue chipper and getting a lot of three-stars to become Connor Shaw, then their recruiting dropped a tick or two as the state was without five-stars, but they started having a horrendous bust rate on four-stars)
Now this is not to say the coaches are particularly absolved. Recruiting rankings have trouble with dumbasses, both behaviorally and in terms of grades. A staff makes its bones on the edges taking the right number of risks that they can get the most out of (some are more skilled at identifying and dealing with this, other's not). I recall Strong having to clean house to a degree, so perhaps that factored in.
Anyway, my larger point is, I'm skeptical the ratings had some massive flaw in them, other than a high level of deference toward people who physically look able to play football and have done so at high level programs/in camp settings against high level players. But if it was truly flawed, I guess I can just ignore OSU/Bama/Texas ratings at all times and assume it's just a mystery if they're really getting good players.
(There's also the motivation factor, and I wouldn't be surprised if a run of Texas players were prone to getting too high on their own hype)
