I would think if you are auditioing for a music school, the music school is interested in your talent (singing, dancing, acting).
However, the school (at large) is interested in your graeds and have admissions policies. If you do not meet the minimum entrance requirements, the school will not admitt you even if the music school accepts you (hope that makes sense).
Advice: Always apply for admission to the school first. I know some people who auditioned and were accepted to the music school, but then were not accepted to school. They were not allowed to attend the music school.
Also, grades make a difference in scholarships awarded by the school and the music school (although the music school may offer scholarships just based on talent).
For questions about musical theater colleges, I high recommend you check out collegeconfidential.com's message board. There is a thread (now up to section 20) with details about every MT college in the US.
Ignorance is temporary. Stupidity last forever.
Watch out BWW...
HE'S BACK.