To be honest, my exact reaction to something like this would be to tell the recruiter the only way it was happening was in a virtual machine, with no camera or mic access. I'll happily do a video interview, but I'm not going to be given a test like that under such invasive, low trust circumstances. Either you trust me not to cheat, or you don't trust me enough to give me the position.

I'm also a bit against tests of this sort, beyond just the privacy issue - in the real world, if you're not looking up things you're unsure of, you're making a mistake. Denying someone even written resources seems like setting them up for failure. But the privacy issue is a big one, and would likely cause me to quit before even allowing access to my machine.