To elaborate on my campus, which is where I draw most of my experience from, the largest fraternities are no where near the top on campus. In fact, it is quite the opposite. They do not draw on the most ambitious, talented, or active men on campus. They draw on the men with like interests, or from specific parts of the state. Many of the athletes, student gov't leaders, etc don't even look at those fraternities because of their membership.
In terms of manpower, if you have any experience within an organizagtion you will agree that there is always a small core group that do the most work. In the military it's the 80/20 rule. 80% of the work is done by 20% of the people. When that is taken into consideration the numbers gap quickly closes. While the larger chapter still has a slight advantage in numbers-that generally means that it is easier for people to slack off and lay the blame on other people or claim ignorance when something is not completed.
A difficult pledge process doesn't mean that hazing is a virtue. However, in large pledge classes bonding and getting to know people cannot be achieved on the same level. Your example of a man in the special forces is good...for the special forces. On a national level, it would work, but not on a chapter level. I would be embarrassed if I didn't know everyone in my chapter. There is no way to justify not knowing and having a bond with someone that is your 'brother' from the same chapter. Also, a brother that does not have to work for his pin is not going to respect or care about it as much.
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It's a big mistake to equate small size with exclusivity. the truth is that the top men, the most ambitious men, the sharpest men, want to join the popular group with the most men like them.
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It is a far larger mistake to equate a large chapter with getting all the top men. In a class of 50, you are saying that all 50 men are best on campus. The best and the brightest are going to look for a solid group of men, but also one where they will have the most impact internally and externally.