I went to grad school at a prestigious public RU and am looking forward to teaching next year at a virtually unknown regional TU. I have no doubt that my advisor would prefer to see me use this as a launching pad for an R1 career, but I have other priorities. And it's generally understood, by my advisor and most others in the field, that jobs are scarce and can't be taken for granted. So in my own very limited experience the problem described in the article hasn't been a problem.
One thing I suspect, and which I find profoundly disturbing: I wonder if the really big RU's are expected to live up to the same standards of assessment and accountability as the smaller schools? I have often suspected that lots of the big universities don't spend nearly as much effort on these things as smaller schools do, but may be misguided by the fact that the last two schools I've worked for have been very highly recognized for their assessment.
I can say that if a prospective college student interested in majoring in my field were choosing between my prestigious grad institution and the virtually unknown school where I'll be teaching, I would have to think long and hard about which I'd recommend. Conventional wisdom says prestigious RU all the way, and I happen to think very highly of the faculty in my field there. Many are far more dedicated teachers than the R1 stereotype would suggest. But though the faculty at unknown regional u aren't as brilliant or accomplished, they've crafted what I consider to be a more rigorous and pedagogically sound undergrad curriculum, and as a group they place a higher priority on teaching. Their classes are generally smaller because of the absence of TAs, which means more opportunities for student discussions and active learning. A degree from prestigious RU certainly carries more cultural capital, but I'm not at all convinced that the education it offers is that much better.
And conjugate is spot on regarding assessment: the faculty at unknown TU are very much under the gun, assessment-wise. The faculty at prestigious RU couldn't care less, and face nothing like the same institutional pressure to define and assess measurable outcomes, etc.