That is generally correct, the conversions favor the guys that can really push the whole race but don't have great wheels. Now DII indoor nationals was held in Albuquerque in 2010 and 2011. While Adams dominated in 2010 largely in part to a slew of ridiculously good distance runners, other sea level schools did very well in 2011, with Shippensburg having a particularly great showing with two DMR titles and a 5k title. Some sea level runners come up to altitude and match/beat their conversions. While you are correct in that the slower times required to match a conversion involve force relationships, the conversions themselves are based on a distribution curve, and outliers will inevitably exist. Recently there was an article suggesting weather systems can significantly change the barometric pressure resulting in faster or slower times due to partial pressure differences/oxygen transport.
Only recently did the NCAA revisit the flat track conversions, because the old ones were so unfavorable it was basically impossible to match your banked/300m track marks. Now we may have swung the other way, or perhaps the scarcity of 200m banked/oversized tracks in the US is actually the cause, which is probably more likely. DII indoor nationals used to be on flat 200m tracks and the times were extremely slow even when someone pushed the pace. Also the times across the board are improving resulting in more chasing times.
Regardless of conversions, the RMAC will continue to dominate DII as it has since Adams and Western joined DII in the early 90s. And with the recent absence of Western, Mines and CSU Pueblo have picked up the slack.