Santiago was given the 4th seed and probably shouldn't have been but not necessarily for the reasons you listed. If you put a premium on winning your league championship in order to be a seed, then no, Santiago should have been moved down. However, CIF allowed for them to get the seed based on the final poll but then decided that because they were a 2nd place team from their league that they couldn't have a bye over a non seeded league champ in same division for first round. As such, that is why J Serra was also bypassed for the "bye" as the #5 ranked team (also came in 2nd from their league) and it fell to Aliso Niguel, the next highest ranked team (6th) based on final poll that was a league champ. All that said, it would've made more sense to just move Aliso to the 4th seed and slide Santiago down and then everything would have looked right. I think there's a problem with the playoff bracketing language and placement in that it hasn't been updated to address any potential issues (such as a second place team in league getting a top four seed), and that divisions are now based on competitive equity where leagues now have multiple divisions represented verses in the past, all league teams represented the same division...
As to how Santiago stayed in the top 4 I'd assume it was based on their body of work as fotos4u2 suggested, and not just their league? Schedule looks competitive with some good results against quality teams with quality wins of their own and their only loss coming to an undefeated Upland team. Centennial is only in Div 3 because of their past two years worth of results which were not favorable. Clearly, they're a much improved team this year (anyone can see that by looking at their results and #4 seed) which indicates they'll more than likely move up to Div 2 next year which is a more accurate portrayal of their current talent level and is a good reason why they were able to play Santiago to not one but two draws. Also, Roosevelt is Div 2 not 3 so not being able to "get a victory" is still not a loss and really not as big of a deal as what I think you want to make it. I think most would agree that in league play, crazy things happen....rivalries, history, a bounce here, a bounce there, injuries, familiarity with each other, or any other combination of factors is what makes league play so unpredictable and fun for almost any league, Sometimes it just doesn't go the way it "should" based on rankings, rosters, records, overall talent level, division placement etc....however, congrats to both Centennial and Roosevelt on not losing to Santiago (if that's something to be celebrated) and yet again to Centennial on being able to beat Roosevelt, which is what ultimately allowed them to win league.
Troy is good, a quality side with enough talent to make a run but coming out of the freeway league as a champion doesn't exactly mean they should be the fourth seed. But then again, having a personal connection to Troy might make you biased...J Serra (a 2nd place team from league), Aliso Niguel, La Mirada are all better options IMO.