That's not true at all. The engineer from India will simply be re-classified to L1 with a reduced wage requirement. While the grad student will require a much higher wage requirement. In the end it will actually turn out worse for someone trying to hire the engineer from Switzerland

You can't just reclassify people to L1, there is a reason there is such huge demand for H1B.

Yes you can. All you need is for the company to have a foreign branch somewhere outside the U.S. That's it.

The person re-classified as L1 will no longer be competing in the lottery with the hypothetical CERN engineer, and the odds of an application to hire that engineer succeeding will increase.