I agree that this is the most valuable way to judge a candidate, but unfortunately I don't think it would work for most students and most companies (been through it all) because: a) students have a fair bit of school work to do, and: b) most companies can't afford the kind of talent that finds the time to work on other projects outside their normal coursework.

Now, for Google that might not be the case — they certainly should be trying to find the top talent they can get their hands on. All the more reason to ask about the extra projects, GitHub account, code samples etc. But just as many people, when they're students, don't appreciate or value the extra work you talk about, they won't do it when they work for Google and are tasked with hiring others. If all you spent time studying were algorithms and C, you won't appreciate the value of open-source contributions and feverishly learning new languages as much as someone else. And you won't hire based on that.

And yes, that's disappointing.