I have to say, this thread is a fantastic piece of the TSR stereotype. I'd expect snow in July before TSR stops arguing over rankings and reputations. IMO an institution is overrated if its rankings are inflated by independent factors (i.e. cases where your average Oxbridge student does more in life than a Brookes student purely because they are the type of person who can get into Oxbridge, not because they went to such and such college) or a vague, self-fulfilling notion of 'reputation' that doesn't actually account for metrics such as teaching quality, resources, difficulty of exams etc. For the first bit, it would seem basically impossible to delineate who has been successful for independent reasons or university reasons - The Economist had a go with some US University rankings a few weeks ago, though - well worth a look. For 'reputation' I just think it goes against the whole idea of academia; if you're not building your judgement of an institution on what it empirically does (it's difficult but doable) but purely what you think it does, then how is the aggregate of those perspectives actually reflective of anything other than general opinion?
(Of course factoring in stuff like 'where do graduate employers target?' into a 'graduate employment' metric has its uses, but, as is pointed out many times on TSR, that really only applies for students looking to work in certain industries. It might be useful if tables were produced for Law/Banking-type students that do factor in these metrics.)
Edit: I'm hoping that in the future there will be more cases like Surrey etc who fly up the rankings because they are actually doing things right, as opposed to just relying on the vague, qualitative 'reputation' I described above. The recent HE Green Paper arguably is trying to push things down this path by focusing institutions on the teaching and soft-skills building experience.