Correct me if I am wrong, but I assume that Princeton, like many private schools from grade school upward, wants to feel it has educated a student fully along its desired lines. Transfers can only be partially Princetonian, I guess. Is this snobbery? Is this legitimate control of one's brand? I think a little of both. It would be nice to think that having spent four years fully at Princeton meant something Princetonian, not so? But there are plenty of four-year Princeton grads who later in life show themselves to be mediocre, or criminal, or stupid, or embarrassing, along with the many one can be proud of. So I would not know whether admitting transfers is good or not.
Perhaps the real question is this: Why not make a Princeton education more demanding? For centuries it was very undemanding, and only after perhaps WWII did it become at least respectable and no longer a finishing school for male elite offspring. If Princeton really made its students work like dogs, perhaps this problem would resolve itself. Forgive my misanthropy. At the age of 82, it comes naturally.