From what facts do you draw the conclusion that there is "widespread dumbing down of course material and grade inflation, " and that "A lot of students who 20 years ago would have been considered middling (but would have gone on to get graduate-level jobs) are now clustered around the top of the class."? I can tell you that at least in my field, (classical music), the level of playing has risen to an very high level, e.x. The Nielsen Clarinet concerto was once considered unplayable and only a handful of clarinetists could play it back in the mid 20th century; currently it's now part of the standard repertoire that college level clarinetists are expected to learn and play.
I do agree that times have changed in regards to the value of a college degree; it doesn't mean as much as it used to; not because the degree has been dumbed down but because the talent pool is much greater then it was in the past while the number of job openings haven't kept up. Personally I think this woman who is suing is an idiot and didn't do her homework about the reality of the workplace but that doesn't exonerate colleges who have perpetuated the myth that a degree will be a ticket to a good job.
The Millenium generation is inheriting an America that offers less then what was offered to the Baby Boomer generation. Social Security, Health Insurance, housing prices, job opportunities; All worse now then in the Baby Boomer generation's prime time. I say this because you, RogueyWon, sound like some older guy who is assuming that the playing field is the same as when you were back in school; big mistake.