This considers only academic knowledge, and specifically only that knowledge that can be assessed in a standardized way.
Such knowledge makes up a very small fraction of success -- though you could make the argument that students' ability to acquire and demonstrate it probably correlates with success much more than the knowledge itself.
Second, why would you want to go to college with a bunch of other kids who just meet some bar on some measure of academic capability? At least in the US, college is most kids' first experience living away from home for an extended period of time. Wouldn't you want to be with driven individuals, interesting conversationalists, performers, intellectual peers across other disciplines, etc.?
Why limit admissions to "book smarts"? Why is that the most fair?