It's not a great idea but it's something that has been done, historically, in a lot of schooling.

Had they treated the houses different in their approaches to education rather than simply pitting them against each other; it might be fairer.

That said, I don't think it's meant to be ideal. I think it's meant to look good or bad depending on how you look at it. In one respect; it promotes unity and fosters unique approaches to growth, and on the other side; it promotes tribalism and prejudice.