You are 100% correct, being in a fraternity is a lot more than just having letters. Your house says who your friends are, what you do during the course of a week, where you are going to come back to once you leave, what you did when you were a pledge, even to some extent what kind of person you are.
None of that is academic. I see grade requirements and treating rushees like they're applying for a job as something thats detrimental to the fun of the fraternity. If I like to hang out with a kid, and they're well liked by the brothers, it shouldn't matter if they never go to class and just get by as long as they stay in school and are fun to be around.
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