I'm not even sure it's reckless. Especially with rates so low, even a fairly small absolute change in interest rates can have a huge impact on the actual price

I'm not even sure it's reckless. Especially with rates so low, even a fairly small absolute change in interest rates can have a huge impact on the actual price you theoretically pay for the house, which includes both principal and interest. Paying way too much at 2.75% may actually be less expensive than paying a more reasonable price at 3.25%. Meaning that, if you've got any concerns that rates might go up in the near future, you're reasonably well incentivized to get into a bidding war in order to close now instead of later.