To answer you both directly, Joseph and DY, I think it is halachically acceptable but morally reprehensible. And there is precedent in halacha for this perspective. Chalitza is a halachic construct that permits but detests the decision of a man not to perform the mitzvah of Yibum. And the Torah permits an individual to be a Nazir, even though it detests the presumption of making such a neder and demands a korban chatos after doing so.
But we don’t even have to go as far as a non orthodox Jew. The elitist mosdos we were all talking about won’t even take in a frum kid who isn’t one of their Stepford Children.
And I am also prepared to consider that there are some basic standards that don’t necessarily make a mosod “elitist” by demanding them. (Shabbos, Kashrus, a reasonable level of tzniyus) At the same time, though, the demands may be a priori, but the acceptance should not be. And by this I mean, the mosod could be able to say – We will accept any Jewish child who from the point of his or her acceptance forward, their parents agree to abide by all the stringencies set out for all students. That would not be hypocritical, and it would maintain their integrity.
But the elitists aren’t prepared to countenance that either. They don’t even have the confidence in the hashpo’oh of their own mosdos to affect positive change. They just a) don’t want to give up the power this policy gives them, and b) don’t want to associate with the riff raff.