We've used the 25 and 50 pair cat5e cables to do just what you are talking about, however now we simply use regular Cat6 4pair UTP to cross connect patch panels. The 'switch in the rack' is certainly an option but most our racks contain 8 to 10 servers so ports would go unused and the cascade back to the core switch would quickly get saturated. We have 4 racks that contain the patch panels and plant wiring and then we cross connect 24 port patch panels out to the server racks. An advantage to that is you only have to light up the number of ports that are needed and you can aggregate port density in one spot (saving port usage). Disadvantage of course is all the wires and additional points of failure.