ortho2003 -- i agree with your comments for the most part. If a PD really thinks that way, then he may very well be what you described him to be. BUT, he may just have the applicants' best interest in mind. He realizes that academic orthopaedics is a relatively small world, and if Dr. X is well-known around the country, more PD's are likely to know him on a social level because all chairmen and PD's are in academics. This can be an advantage in getting interviews!
Yes, if the guy thinks academic hotshots are somehow superior, yeah he's prick. But he could just be giving a piece of advice to help an applicant out.
Last year, I had 4 letters from orthopods. 2 of them were well-known individuals who were editors of a few journals, including JBJS. Their names were mentioned at many of my interviews. In fact, at the place where I ended up matching, one interviewer told me that this individual gives talks at their program once a year and they were very good friends. He couldn't say enough great things about him. He knew this guy better than I did! As for my other 2 letters, well they were really good letters but no one knew who they were. A couple of interviewers, as they were flipping through my file, even said "who's Dr. Y?...I've never heard of him".
So it's just a game. It's human nature. We're all more likely to pay more attention to a letter that's written by someone we've had drinks with in the past.