That's not Jane Street's process at all. I know first hand people from schools you've never even heard of that got internship offers, and I also know first hand people from MIT that got resume screened out. I'm not going to claim that there is no school bias at all, I don't know the finer details - but it's definitely not explicit as you describe. There are a lot of comments all over the internet (including this thread) from people at non-target schools that were interviewed.
There are some trading companies that do seem to legitimately do that kind of filtering (Two Sigma's application has a drop down menu for school with like 10 options and then "Other", DE Shaw asks for your SAT score, etc.). So I can see where the idea came from, but it's not true of JS.
