I agree, employers may miss out on some great people if you make cuts based on grades. However, you are playing the averages. A typical student with great grades will probably be a more effective employee than a straight C student (but not always).
Sure there may be some excuse for the bad grades, but employers don't want to hear excuses when you are working for them. They want you to complete your task effectively and efficiently.
I have seen "bad" students excel in the workforce. I have seen super brainiacs totally crash and burn. There are not surefire rules, but grades and test scores are just another piece of information about someone. Not perfect, but better than nothing.