I went to Rice which had a similarly strong honor code, and it absolutely inspired pride. In me, and from what I could tell in many of my classmates.
Is it propaganda? In some sense, yes, the only way to maintain such a culture is to repeatedly insist on its importance to prospective and current students. But if so, then it is self-fulfilling propaganda, and in my opinion the honor code made my experience richer.
It's a win-win.
It also made the experience richer for people who cheated witih impunity.
This mirrors my experience at Stevens. The professor would not babysit us during exams and that really did inspire pride. Also the exams were often brutally hard which inspired despair.