Wren,
I am happy to hear your daughter has found what appears to be a great fit for her. I agree fit is one of the most important things to help a student thrive in college. Far too many people focus solely upon prestige.
For example, I would discourage most Ivy League colleges to aspiring engineering students. Among them, only Cornell is particularly strong, but still overall weaker than say Michigan or Georgia Tech. Among the most elite schools, only MIT and Stanford are particularly strong in most engineering fields.
Also, the emphasis on undergraduate research varies by school. MIT encourages it a great deal starting in freshmen year, and it's also pretty common at Princeton which is undergraduate focused. It happens less at Harvard itself, but it's also possible for a Harvard student to work on a research project at a joint Harvard-MIT research institute such as the Broad Institute. The point is that elite schools are distinct from each other, reinforcing the point that fit matters.
However, I strongly disagree with your characterization that Harvard, Yale and its peers are only good for preparing for careers in law, medicine and business. The first real benefit is having an outstanding peer group throughout college. While there are some very strong students at every state flagship or better, the difference is that the vast majority of students at the elite colleges are very strong, and some are world-class. It makes for a different learning and social environment.
The other thing is that these schools really are outstanding in many fields, ranging from English Literature, Mathematics, Physics, and Philosophy. These schools also do a great job in placing students into graduate programs even outside of law/medicine/business. As for career opportunities right out of undergrad, I won't go into detail except to say I know first hand that students from the elite schools have a different set of opportunities than those that attend most state flagships (and yes, I know that USC is a private school).
