I don't know much about military training, but I do know that grouping students into "squadrons" is done today - I don't know that the grouping is based on anything, but it makes a certain kind of sense that Starfleet would embrace a kind of "meritocracy" approach to it, even if it also comes off as elitist.
Perhaps Nova Squadron is a long-held academy tradition, and despite the initial fallout of the 2368 incident, that’s overshadowed by its long history of outstanding cadets, a legacy the academy didn’t want to suddenly erase.
I think this is likely. Scandals come and go, but they often don't overpower institutional inertia.
Is it safe to say that casual use of the notwithstanding clause has been normalized to the point that there are no real consequences to invoking it any more?