Do you have a source for this claim? None of my contracts in the US have ever had something like this. It's in fact illegal in most jurisdictions, including California.

You're a fool if you'd sign away copyrights to all work you do outside of your place of employment. Actually, that shouldn't even be legal.

You could make it a short take-home assignment where the code doesn't get used by the interviewing company and the assignment is short enough that the interviewee doesn't feel like they need to get paid for it. It would basically be the same as doing it in-person but removes the added stress of the over-the-shoulder scrutiny, leading to a more realistic scenario where a developer has resources such as Google and Stack Overflow at their disposal.

In my engineering days, a company I interviewed for had me prototype some stuff in SolidWorks but gave me the courtesy of working alone. I just had to tell them when I was done. Even this was much more preferable to an in-person on-the-spot tech interview. I got an offer for that job, but if I had to perform the same task with someone watching, I don't think it would have gone as well.

How would this be enforced?

I suppose it could end up being more of a problem for the hiring company after this practice became more widely known.

This is the root of the problem with contract-as-interview, as far as I can tell. It wouldn't be completely unreasonable for someone to take a few days off from their job to interview (although I wouldn't do it). But both of the points you mention are standard for creatives, at least in the US, so I don't know how many people you'd legally be able to interview.