Every single component of the college admissions process could be considered problematic in isolation:
Exams: tougher on people without access to expensive test prep services, some people may suffer from test anxiety or other disabilities that impact their ability to perform in the standardized exam format.
Grades: schools vary wildly by rigor, grading practices, and comparative student bodies. An "A" may mean something wildly different at one school compared to another.
Essays: Can just be written by Chat GPT or your highly-paid consultant
Extra-curriculars: can be gamed and curated
But the fact of the matter is that most college admissions is not particularly competitive. Even many flagship state universities admit the majority of applicants, and some offer automatic admission to students above a relatively low bar. The state universities that do require essays likely only reference them in rare cases. It's only very small (often special interest) schools or the super elite (that are trying to parse many students who look perfect on paper) where they come into serious play. I can understand why Julliard would want an essay from someone looking to become a playwrite. I can also understand why Stanford might want a tiebreaker comparing two students with 1600SAT who were valedictorians. There's no sense in taking that away.
I also think the "overcoming hardship" thing probably gets as many eyerolls from admissions committees as genuine advantages. Unless you have a truly unusual hardship (i.e. raised in foster care, spent your childhood homeless, etc.), most committees are smart enough not to break out the world's tiniest violin for you and admit out of pity. For the rest of students, they mostly want to see if you can string a few paragraphs together (although Chat GPT makes it difficult to effectively test in a cold application), and they want to see if your goals make any sense with the school. Your essay on how much you admire the philosophy of Nietzsche probably doesn't make you a fit at Liberty U.