Bad hires are a fact of life. It's unavoidable. Hiring is a crapshot. Just like romantic relationships. Would you say, "I had a bad relationship once, so I'm going to grill every date to make sure something isn't seriously wrong with them"? With that attitude, you'll never have a relationship again.

Interviewing is a two-way street. Especially with senior engineers. You're trying to convince the candidate to work with you. After all, they could say no, and walk away. Moreover, nobody wants to work for an incompetent boss, and we know there are a ton of incompetent bosses out there. What if I, the job candidate, want to give you, the interviewer, a test to make sure you know what you're doing? Don't worry, I can give you a take-home test to do in your "spare time". ;-)

I don't think companies realize how many potential senior candidates they drive away with audition-style interviews. I've religiously avoided them, just never applying to companies who do them. I'll walk away if I don't like the hiring process.