I think this is the most telling bit. Time after time, I've seen excellent competitive programmers end up being mediocre engineers. Almost none of them are bad and it's also a very objective (at least on paper) process which is probably why Google is happy to stick with the process but most of them also aren't amazing innovators.
I'm sure that university student who aced the interview turned out to be very smart - they went to a great university and can solve challenging puzzles. But I don't think they'll end up being the engineer that builds Google's competition to ChatGPT. I wonder whether a course correction where Google starts looking for people who create really cool projects even at the risk of not being able to solve any coding challenges would actually help.