Great question, I have thought about the same thing a lot of times, but the way I see it is, you just have to market yourself, just like you would be marketing a new product that is vying for attention from competitor's products.

IMHO, you have to support your accomplishments/qualifications with solid proof that you have indeed accomplished what you have stated. If there is a disconnect between what you have stated and what you really are, these discrepancies will be obvious during, say, the interview process.

You had mentioned what happens if the letters of recommendation can be written by the applicant and have someone close to the applicant sign these LOR's. Generally the adcom's don't appreciate or give a lot of weight to letters written by family/friends/relatives. From what little I know, applicant's are either expected to get the LOR's from former supervisors/current supervisors or managers who are familiar with the applicant's performance in a professional setting. This is the main reason I believe they want MBA aspirants to have enough work experience so that their performance can be gauged in an unbiased manner in comparison to other applicants.

So having said that, is it possible for applicants to cheat, sure, it is. When I was in high school, the Dean of that school used to say, "If you are trying to cheat, you are not cheating anyone else, but your own self".

I'd like to hear what other people think about this very important question posed here. Thanks for asking the question MBAspirer!

Cheers!