Thank you for sharing. This is the first chapter from Todd Rose's excellent book The End of Average. In the book, he also touches on the fascinating topic of context. For example there is no such thing as a person's average level of aggression - IF I am around my parents I tend to get aggressive, but IF I am around friends and strangers I am calm.
Even Rose's article (I haven't read his book yet so I can't really say about that) tiptoes around what was going on here. It wasn't just a naive application of statistics. Rose gets through the Norma story without mentioning eugenics once, but the whole episode is so obviously part of America's pre-WWII eugenics swoon. Beyond specific beliefs about politics, race or genetics, but linked to them, there was a whole Zeitgeist, the collectivist spirit of the age that gave us Busby Berkeley musical numbers https://www.youtube.com/watch?v=ysvQ5MaUbd8 and the IBM company songbook https://www.networkworld.com/article/2333702/a-history-of-si... . This was a time when it was acceptable, indeed it was progressive, to be violently hostile to difference or defectiveness: see for example War Against the Weakhttps://waragainsttheweak.com/ and, maybe most especially, The Black Storkhttps://global.oup.com/academic/product/the-black-stork-9780... . And of course it's no coincidence that the pioneers of statistics tended to be particular fans of eugenics themselves.
Unfairly or not, the OP does feel like a summary of Todd Rose's own "When U.S. air force discovered the flaw of averages", an excerpt from The End of Average, which you linked there. Rose's article has been strongly upvoted here several times over the years.