The point is almost all applicants have great packages. Working on a PhD is a job. There is passion involved but in the end it is a job and there are so many who can do it. It becomes very difficult to pick a candidate from the application pool. This is where the recommendation comes in. I'm not passing a judgement of whether it's good or not. However there is a problem of access. To have access to a good research professor one has to have studied in a good institute. That means so many applicants have a serious disadvantage in getting such access. As far as I have seen grades and test scores really don't matter in research. A person with a good test score might cruise through coursework. However when it comes to research, it's a whole new ball game. Great academics does help, but without creativity, independent thinking and perseverance, getting through a PhD program is difficult. Not impossible but difficult.