I'm at an R1 and in my program, we get about 150 apps for ~3-5 spots. Grad students don't do initial screenings of applicants here. That doesn't mean they aren't consulted at all, but we certainly aren't sitting around choosing which apps go in the garbage and which get passed to faculty.
It does not surprise me at all that some places do this. I sort of doubt it gets used as a deciding factor, but perhaps student opinion is taken into account/considered by the faculty.
But then again, our field is pretty small. Divide 150 by the number of faculty taking students, and it's a pretty reasonable number for each person to go through. I can see the advantage of using a student to screen for "absolute no" apps. The idea doesn't bother me personally.