It's becoming more common each year, not just with Summit teams, but Worlds teams as well. Worlds has stricter substitution rules, but it still happens. There are two sides to the debate. Some want the absolute best team on the mat. Others think those that earned the bid deserve to be there provided they haven't lost any skills.
My thoughts on this subject and sandbagging have evolved over the years. The bottom line is, right or wrong, the gyms did not create the monster - the USASF rules and the EPs did. The rules almost encourage this type of behavior, and some gym owners use jackets and rings as a marketing tool. Parents buy in to that, so they ultimately are to blame as well. Some gym owners get so much pressure from the parents to win that they have feel they have to replace the weaker athletes in order to keep the majority happy.
As others have said, money talks. If your gym does this and they continue to keep athletes and the parents are willing to pay for it, their strategy has worked. If everyone jumps ship and leaves for another program, the strategy failed. Ultimately as parents, we are the decision makers.