There are lots of ways that entities that are not constrained by the calendar can accumulate positions for those entities that have calendar constraints (R2K index funds in this case).
What you said, "the former get in and run them up to (the rebalance) and then sell" reflects the old brute force thinking. These days, it is more like the former see the stocks that will be added weeks or even months in advance, strike a deal to accumulate x shares to be sold at market at the close on rebalance date with an index fund, then proceed to do so and book a solid guaranteed profit.
Furthermore, keep in mind the index funds are designed to TRACK the index. There are more elegant ways for them to do so than the brute force approach of buying each stock in proportion to the percent of the R2K value it represents.
Meanwhile the index funds are also saying - you know, just forget about the last 500 or so stocks in the index. Collectively they don't mean very much. We don't need to buy them, we simply need to buy something that BEHAVES LIKE them (and, oh by the way, is way more liquid). They take the last 500 stocks or so in the index, calculate the weighted average alpha and beta, then find a very liquid stock (or some kind of customized derivative of one or more stocks) and buy THAT instead of buying big positions in illiquid stocks that will move the market.
When you think it through it is pretty obvious.
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