It is a sad truth and I think you hit a lot of nails on the head. First if you are not sure, do a contract to hire, while I think the recruiters are a waste of money a company can directly 1099 a contractor for a month or two to see if they are a good candidate. Secondly if you have a good technical person with people skills, then you have all that you need for technical interviews, HR should go to this person and find out exactly what are must have skills and nice to have skills, many people get weeded out by HR because HR follows the description like an instruction manual many times missing exceptional people who are just getting a start or that don't have one skill that they could pick up in a week. You are right though a good technical person can sit down have a chat with a candidate and tell if that person will be able to fulfill the role. They may not be able to identify the superstars but they will be able to weed out the incompetent. To find the superstars you have to gauge excitement, passion and interest they are more fluid characteristics and can be underemphasis due to stress of the interview, bad day, or a multitude of other reasons.
I think the big companies processes or fundamentally flawed and end up weeding out a lot of good people who lack the "trick" question trivia answers. I personally would not do well on many of the pure CS questions because it has been years since I truly studied all that stuff, and as you said, I just use the linked list implementation in the library. That being said, I have 3 exits, have built many large systems, can bang out anything you can think of in JavaScript, IOS, Android, or Java the reality is, if I am dealing with a known CS problem I am going to look it up in reference material anyways, trivia is really just a way to say look at us we are so smart, when the reality 90% of the time development is gluing things together in new and novel ways. Even the iPhone, it was gluing OSX onto a mobile platform and bringing in touch technology, sure there was some pure CS items but the majority was just like everything else, glue stuff together, build up libraries and make the code reusable. I think they loose a lot of diversity of thought when they filter it down to trivia master need only apply.
