I agree this is prob a big city problem. A bunch of 1A & 2A schools do not have wrestling and some 3A are also missing out as well. If you live in a rural area and want to wrestle there is but little choice but to wrestle the best program nearest you. If they had the policy of not allowing kids from out of school district not wrestle then it would huge barrier to the sport.
In the city it might be considered recruiting, but there are a many valid reasons for not wanting to wrestle with the program in your district. Personality conflicts, financial, better or more focused programs etc.. This seems like a backwards policy, but then again the devil is in the details.
If I had a high school buddy coaching a team and it meant just driving 5 more min to take my kid there then I would def go with that program. Not with people I didn't know and had no history with the program. Just common sense, besides it takes just a minute to change high schools anymore especially in big cities.