I just want to second this (also did an undergrad in physics funny enough). I specifically sought out the harder professors in my undergrad and for the most part I'm happy I did it, but it's also a good thing that I'm not very motivated by money or prestige because I saw many of my colleagues who had gotten into better schools or jobs (even just the return calls on applications) who chose the easier routes or cheated. They are without a doubt wealthier. What mattered the most was the line items on their resumes and networking, but there is feedback in this so one begets the other. Fwiw, I had a 3.3.
So it then becomes hard for me to make suggestions to juniors. It isn't difficult to sniff out those like you or me who are motivated by the rabbit holes themselves, nor difficult to tell those who are entirely driven by social pressures (money, prestige, family, etc), but what about those on the edge? I think it's the morally best option to encourage learning for learning but it's naive to also not recognize that their peers who will cheat will be rewarded for that effort. It's clear that we do not optimize for the right things and we've fallen victim to Goodhart's Law, but I just hope we can recognize it because those systems are self reinforcing and the longer we work in them the harder they are to escape. Especially because there are many bright students who's major flaw is simply a lack of opportunity. For me? I'm just happy if I can be left to do my research, read papers and books, and have sufficient resources -- which is much more modest than many of my peers (ML). But it'd be naive to not recognize the costs and I'm a big believer in recognizing incentive structures and systematic issues. Unfortunately these are hard to resolve because they're caused by small choices by all of us collectively, but fortunately that too means they can be resolved by small choices each of us make.