Are all NITs good enough in terms of students' smartness and starting packages compared to AA grade colleges in Bangalore?

I, myself, am from one of the top NIT and yes the starting packages are good enough in my college. But its not the same for all NITs. Lower ranked NITs' students, on average, don't get very attractive packages. Even then, sometimes, these lower ranked NITs produce unexpected results. And as far as your "AA grade colleges in Bangalore" are concerened: NEVER HEARD OF THEM. You probably are from Karnataka and they probably are popular in Karnataka, but nationally they are almost UNKNOWN. Students in NITs are selected on the basis of AIEEE (now its JEE) and if you think these entrance exams judge the true smartness of students then yes we Nitians are smarter. Performance in these exams is not just influenced by the preparation but also by the "quality" of coaching you get. So I don't think its always right to say that: if X is getting better rank than Y then X is better than Y. At the end what you will become depends on YOU only. But yes, a good college makes life a lot easier.

Definitely. Respect of NIT tag is not fake. If you not getting placements , then also it makes your CV worthy. Also NITs and IITs give far more than just formal education and placements.