They are sending our scores and responses to our teachers, and I am sure that most teachers will report a student with a C in class who then gets a 5 on the AP exam.
The AP exam is a second chance for kids who grasped the material but didn't get great high school grades for whatever reason. I know a kid who could very well get a C in class and a 5 on the AP exam. The class is too easy for him.
These were my AP Calculus teacher’s AP score distributions for his students when I went through his class: http://drootr.com/calc/content/BCScores/BCData.html. Grades usually averaged around a B/B+, so many students with Cs were getting 5s on that exam.