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The perils of not keeping up with the literature!! thank you -- did not know about this work. I also agree with all the complex effects of class sizes such as changes in admissions that you outline. I dont think much of the literature considers these channels anyway, but IMO they are likely to be important.

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neat article!! my favorite data on the subject comes from this cool paper:

https://academic.oup.com/qje/article-abstract/114/2/533/1844228

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Hi Abhishek, the same authors wrote a follow-up paper nearly twenty years later which comes to very different conclusions:

https://economics.mit.edu/sites/default/files/publications/maimonides_redux.pdf

It's one of the reasons why I waved my hands a bit instead of quantifying the effect

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