To be honest, I think this is a problem with any "elite" state/public school. Off the top of my head, schools like UC Berkely, UCLA, Michigan, UIUC fit this bill. In fact(anecdotally to this admissions year), I have heard schools like Purdue, UMass, and Rutgers have been rejecting quality in-state candidates. I don't think GT is necessarily biased against legacy applicants, I think they have fixed #s of seats for in-state and out-of-state kids. And as people start to figure out what it takes to get into college, the average applicant is more qualified, leaving many qualified candidates left out.
I'm not sure if this is accurate. On a person-to-person basis, maybe, but the out-of-state acceptance rate is 13%, while the in-state rate is 35%, so there is some favoritism shown towards in-state candidates IMO.
Source
With that being said, I do agree with point 2- when I was on campus, football interest with students was at an extreme low, although I guess 3 straight 3 win seasons will do that. While I do think increasing legacy students may provide some boost to attendance, I think getting students on campus interested in football would be the biggest step.