Speaking from personal experience, I ran a hair under 9:34 for the 3200 in high school at an elevation of 5300 feet above sea level after running only two days a week the summer before my senior year (I was a late bloomer who didn't run at all until junior year in track). I don't know what that's worth as far as a conversion to sea level(a general rule of thumb is 2 seconds for every minute), but I know it's worth something, because I have yet to see a high altitude guy go to sea level and not improve his PR drastically.
So what's my point? I attracted a scant level of interest from some Rocky Mountain schools, but no $$$ to speak of. So when I walked on in college, I was not on the coach's radar screen. I was, unbeknownst to me, anemic all through college and my performances suffered. No one cared because they had no vested interest in me. After college, I finally found out that my serum ferritin was ridiculously low, so I started supplementing with iron and training HARD to "make up" for lost time. In the end, I got myself into 29:30 shape for 10k, but sustained a career ending injury because of my haste and disdain for coaches. So, the moral of my story I guess is that I may have benefited from a scholarship given to someone else (the schools that showed interest but offered no $$$ had accomplished foreign athletes) if for no other reason than the coach would have had an investment in me to figure out what was wrong, get it corrected, and develop me correctly.
I seriously doubt I would have ever been an internationally competitive athlete (I lacked raw footspeed), but if I was able to run a 9:15ish sea level 3200 on the scant level of training I actually did in high school , I would think I had some potential. I don't know that US distance running is being "stunted" by the international competition for domestic scholarships, but mine is an anecdotal story where it may have played a role.