Sorry, don't have the time to read 5 pages tonight, but here's my 0.02.
Stars are simply used by most recruiting services after they rank players 1 thru whatever by position, then by overall. It's why you can see the nation's best center prospect be a 3*, he simply isn't as good as the 14th best tackle prospect. Anyways, after they rank them regardless of position, they simply go down that list to a cut off point, that varies year to year, and players above that line are 5 stars, down to the next cut line to split the 4 and 3 stars. After that, players move up and down based on so many factors it's amazing. A percentage of that ranking is affected by offers from schools, a recruit that gets offered by Alabama, Clemson and such, gets a nod up, offers from only Indiana State, a nod down. Obviously, these guys watch film, go to games, dig into stats, vitals and everything and either using a consensus between a few, or one man's opinion, they slot them into a ranking. Yes, top athletes get higher stars, we can all go watch a highschool game and see talent. So these guys can usually determine the difference between a number 1 thru 5 vs a 26 thru 30 player. What isn't taken into consideration, or is very difficult to do, is mentality, personality, etc. Basically, these are the unknowns that a coaching staff devotes a lot of time and effort to dig deeper, evaluate more closely and such. Even then, it's an educated guess, Another thing to consider, that isn't factored into rankings, is fit. Will said player fit the scheme, will the scheme change for or against him during his time. During the players career, what will all the changes that occur, affect.
The reality is, the higher ranked recruits are more likely to perform up to a consistent starter level at some point in their college career. No determination is made about freshmen play ability. Some players are ready, depending on the team they go to, others are not. There is no clear answer other than the odds of success. A 5* has a better betting line to be successful than a 4* and so on. The star system was, and still is, marketed towards the fans. Coaches will use it to their advantage in some press conference or interview, but no coach who's successful, recruits based on any recruiting services evaluation. It's tape, in person game watching, practice, camps, visits. Simply put, their eyeballs.
I enjoy the stars. I like getting more than the next guy. I also don't look at a 3 star guy who the coaches offered and took a commitment from after their own personal observations in a negative light. Any coach worth his salt is going to go for the best player he can get at the position he needs him to fill, if he can't get his number one choice, he moves down until he gets what he can. Our problem is, the coaches number one choice isn't always the same as ours. We look at a list and want the top players in every position we take. The Doomsday cult will use any failure here as proof of the impending asteroid impact they live in fear of.
The fact is, you can only evaluate a recruiting class after the 3rd and 4th year, after signing. That's where you'll see the most accurate, and pertinent ranking.