At my school, we dropped in-house legacies to other chapters unless we knew them already and they did not get along with the bio-sister, or if they were just unbelievably top-notch (4.0, A++ personality, lots of extracurriculars, yadda yadda yadda...). As was stated before, grabbing up someone's legacy is a coveted skill. Plus, numbers wise, it is smart since 99% of the time, the in-house legacy goes to that house (I wish my sister had rushed! That must be so cool!)
As a rho chi, I had an in-house legacy in my group who probably would have done well in recruitment (hate that word!) but she was dropped by everyone but her legacy chapter by skit-day. She said she was disappointed even though she told us, all her friends, etc. that she would go "XYZ". So if you really want to try everyone out, please, let people know that!
This brings up the dirty little secret of "rush spies"...
*Edited to delete details...I don't want to concern PNM's with possible unethical practices that may take place in some circumstances, because they have no control over it. My experiences are gleaned from attending one school as a GDI (hardcore Southern rush school, most of my friends were greek and told me LOTS) and then attending a school that is more laid back (which, still, was not perfect). All schools are unique, as will be PNM's rush experiences.
This disclaimer brought to you by the Committee on Worry-Free Recruitment