Companies who treat potential candidates unfairly eventually tarnish their reputation. You don't design your process for the single outlier crazy person and then treat everyone like they are potentially crazy or liars. You treat everyone with respect, that's how you build a reputation. Respect includes respect for their time amongst other aspects.
Presumably this is partly why hiring is expensive. Not that I'm sure it's really that expensive in the big scheme of things. The problem isn't the process being difficult per se, it's the process having poor predictive power.
Firing a bad hire can be just as or more expensive than hiring them in the first place.
I agree with your overall points- especially with regard to respecting your candidates time. You do need to verify that the relevant information they provide is correct however. You wouldn't make a significant investment in finances, buying a car, marrying someone, or go into business with someone if you didn't trust that you have a decent understanding of what you're getting into.
Then again, if you do, it's a lesson you'll learn rather quickly. Respect yes, blind trust no.
This is a bit of a fun story to tell in person; this was the same person who claimed to be the second coming of Christ, and tried suing us for religious discrimination when we didn't hire him.
Fortunately for us, the people in the interview didn't respond to his claims at all, didn't mention it in the feedback we gave him when we declined to hire him, and (edit: the company) lost only lawyer fees fighting the lawsuit.
That said, hiring is damned expensive, and I have a hard time faulting companies who make the process difficult for potential candidates.