Thank you for your input. This example is widely used in introductory organic chemistry classes, I think because it is an easy one to make up off the top of your head, and then assign it as a practice problem. I always wondered if it would actually have a strong preference for one ring over the other, and if so, why.
I have also considered the issue with the 1,3 alpha proton being more acidic. If it were able to make either aldol cyclization product then it would happen despite that more acidic proton. I have seen a real example where the more acidic proton is present and a robinson annulation can still happen, but this was with ethyl acetoacetate, which is slightly less acidic than a 1,3-diketone. It's on page 639 of Clayden textbook and also I have seen it done in Sophomore organic chemistry labs, suggesting that the reaction actually works. In the picture it says that reaction gives 90% yield, so apparently the ring formation is so favorable that it eventually can make the ring even though there is an option for a much more stable enolate ion to form.