I have all these same feelings about dev "testing" in interviews. Why does no one ask to go through an existing project that a person coded? I think someone's own explanation of software that person wrote -- including the good, the bad, and the ugly, is a much better demonstration of all kinds of coding skills (architecture, interfaces, documentation) than just live coding something or even a contrived take home test. Doing real work for a company without knowing their system is another artifice that doesn't really show you what someone can do when they know a system.