I'm about to graduate from a college that's included median grades on our transcripts for quite some time (it's a small ivy in Northern New England--you can probably guess what it is.) I don't really think it affected my graduate applications in any substantial way, though I am in English, where the subjective parts of the application are more important. The median grades in my English classes tend to be As or A-'s--while getting an A in those courses isn't anything to phone home about, getting an A in an English class with a B+ average is pretty impressive, just because it shows that the professor is grading a bit more difficultly. Those more "difficult" classes were also the ones in which I achieved citations--which professors will occasionally give to a student from whom a mere letter grade is not sufficient, and they're allowed to include a few sentences that will be attached to any official transcripts that get sent out--and whom I eventually asked to write my LORs.
Personally, I think median grades are more helpful when selecting courses while still an undergrad--it's nice to be able to tell, for instance, which sections of a large lecture course have more difficult professors (a good thing if you're just trying to fulfill a distrib) or, if you're one of the more lazy students that populate my college, it also helps you figure out which courses are going to be the "easiest."