My preference would be that public colleges and universities would be a meritocracy. How each individual school wants to weight the actions that factor into admission would be up to them. If they want to go purely academic performance, that's fine. If they want to give weight to extra-curriculars, I'm fine with that. If they want to give weight to an individual with a compelling life story or a compelling essay, that's fine. If they want to look at community or charitable services done and factor that in, cool. I don't think every University has to be absolutely cookie cutter and I'm fine with different ones valuing certain aspects of what a person has done in their life differently.
However, I do think it should be MERIT, not who you are. I'm not in favor of weighing someone's application higher simply because they're a legacy. I'm not in favor of weighing someone higher because they're a minority race. I'm not in favor of a school weighing someone higher because they're male or female because the schools population is heavily slanted in the oppsite direction. I'm not in favor of a school weighing someone higher because they're in-state as opposed to out-of-state. I'm not in favor of a school weighing someone higher because they're from a state the school doens't have a student from (My University actively attempted to get a student from every state in the US).
I think Private Schools should be able to do their selections in any legal way they want. In their cases, if they feel artificially creating a racially diverse campus is beneficial then be my guest. If they feel that legacies are important and a grand tradition, then that's fine. But I think in terms of public universities it should be based on what you DO...not who you are.
Then again, I'm one of those strange people that would prefer a society where everyone DOESN'T go to college because to have such a society then the entire notion of college generally has to be watered down to a useless degree.