For me this part about preparation is the hidden value of this approach. For most interviewees the interview isn't a 2 hour process, it's far more time spent in potentially-irrelevant preparation. It seems like companies might as well turn that time into a more direct skills evaluation.
And, if I'm reading you correctly, it may end up being a benefit to the interviewee, too. At the end of the process, whether I got the job or not, I have additional "implemented X in Y" experience.
I'm slightly embarrassed to say that didn't even occur to me, but yes. It makes the interview experience helpful for something other than more interviews.
