No, not even close. It is consistently raanked among the best universities in India, often among the top five.
AMU at 5th spot on India Today Universities Rankings 2012 : 2012 - India Today
Aligarh Muslim University || AMU News
6 IITs, AMU, JNU, Panjab University in top 100 Asia varsities - IBNLive
It has students of all castes and creeds, not just muslims. And even among muslims, the student body comprises of a very diverse set, of varied sects and traditions, and not simply the "talibanizable" variety. That is hardly a recruitment pool for radicals.
In the past, some campus political factions in the AMU have played a role in the rise of certain extremists, including today's SIMI. But the university itself is hardly to blame, it just so happens that a few of their alumni took that direction. They also have produced many (in fact, several times more) outstanding alumni, including a president. Campus factions in certain other universities have also contributed to the wise of left wing extremists like the naxals.
Don't let the "muslim" in the name fool you - AMU is no hate spewing madrassah.