Would you really think someone with a mediocre audition fits the bill? Probably not. A potentially great guitarist will have already achieved certain milestones when you audition them. They will play all the songs you ask them to very well, but they will also show you something that really demonstrates their talent.

You might think 3/4 is pretty good. And maybe it is. But candidates with high potential probably ace them, and have other qualities that aren't asked about in the interview. For example, the greatest intern I ever hired had no practical experience in our field, but developed a very successful game mod. Achievements like that are the mark of potential.