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How much of a factor is the quality of the high school?

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The ranking for our kids' high school just came out and it's ranked around 500 in the US, putting it in the top 1.5-1.9% of US public high schools. How much does this matter to colleges? My husband and I have been having "what if" discussions, mostly centered around our sophomore daughter who is a B/C student in honors, AP and regular classes, and is in the bottom 25% ranking of the school (3.0 weighted gpa) We're trying to figure out if being in the bottom 25% class rank at a top 1% school is better than being in the top 25% of an average school, and what that means for her for college. H thinks it means starting out the first two years at a community college because no school we can afford will take her with that class rank, and I think he's being too negative (but I'm a bit of a Pollyana). What do you think?

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