IMO, if you think a prospect has the ability to be a legitimate contributor to the team, you offer them and recruit them. You don't wait for bigger fish and then try to swoop in January on players that were further down the board. You continue to recruit big fish, and IF you are lucky enough to sign a bunch of the big fish and are in a numbers crunch you either:
1. Realistically state to the prospect "we're happy to have you and honor your scholarship, but the other 4 players we're recruiting are higher up on our board and if you're looking for early playing time you may want to consider other options, or you can come here ready to compete against a lot of depth." This would handle most scenarios in a very fair way.
2. In the event that you still have too many bodies AND for the first time ever you don't get any attrition/transfers, then you take it out of the 5Y pool.
It's perfectly valid to have the opinion that Notre Dame should operate on some superior moral plane that almost no one else operates on. I don't think that's the best way to approach things. I say this because virtually every NCAA sport at virtually every school doesn't operate this way. In lesser sports, kids get straight up cut all the time. Whether because of a coaching change or transfers or recruiting or a myriad of other reasons. I had a friend at Syracuse who was a top recruit (consensus top 10) at his position and they promised him that they only recruit one kid a year for what he played and he was "their guy." He played as a true frosh but eventually got beat out by a kid in the class above him who had redshirted. Then the staff brought in multiple transfers and some fresh recruits... and coming into his junior season they simply said they needed his spot/money for other kids and that was that.
That is the reality of college sports. And no... I'm not advocating ND do anything close to that, because I find it unethical. What I am advocating is recruiting kids earlier and harder who are GOOD but not elite players, and then being prepared in the rare case that there is an overcrowding issue to say "here's where you stand, and why it might be hard to get on the field." It's an honest, up front approach that ensure we don't get burned like we typically do.