Yep, I think these two things can be true at the same time:

1. Admitting a certain amount of students based on legacy status is not necessarily a bad thing

2. A University should not be eligible for taxpayer funds if they have admissions like (1) or similar holistic criteria.

In a society as diverse as America I think 2 is a fair line to draw. And the universities with large and powerful alumni networks where legacy admissions are most relevant have the least "need" for public funds. They have huge endowments.