This is an issue that causes a lot of pain to people on both sides.
The pain by those who are rejected is probably so intense that I don’t know how objective they are but at the end of the day IF a school feels it will be negatively impacted by accepting too many people from a certain group it is wrong to insist they accept them anyway.
Of note (1)the Sephardic elite for the most part doesn’t send their children to schools that don’t have quotas. Why not?(2) People I know who very strongly condemn Israeli schools for not accepting too many Sephardim send their (American) children to very picky and rejecting schools