I assume that they were mostly incompetent rather than evil, but it doesn't matter from the perspective of a company attracting talent.
Many people looking to hire are clueless of this and cannot explain why they have trouble hiring (a guy once simultaneously complained to me that he couldn't find competent programmers and complained that I wouldn't do small, sporadic 3D geometry jobs for $50/hr). I have noticed a common smugness amongst people hiring (despite the fact that many quickly reveal themselves to be of less than stellar technical ability). This is probably a bad attitude in a market where the best talent can quickly get multiple job offers and where not every person hiring is a jerk.
Part of the problem seems to be that many companies get by on hiring cheap workers. In particular they take advantage of students just out of school. That doesn't work very well because it is hard to retain those people, but it appears to be enough to keep many companies afloat.
-I was contacted by a company that found my resume and decided I was a "great fit" to an opportunity they had. They described a great, technically rewarding position.
-3 phone interviews and approximately 1 month later, I go to the in-person interview.
-HR guy says to me when I get to their offices that the original job is unavailable and asks if I'd like to interview for a much less desirable junior position. Also, by the way, I will be interviewed by completely different people and given different questions.
-Against my better judgement I stay there and go through 3 hours of whiteboard type questions (stuff like "implement atoi" -- I consider this legitimate, but I don't need to do 5 or 6 of them) with 3 sets of 2-4 people. It began at 11 and by the end I was pretty tired. HR guy came in and asked how I was doing around 1, told me it was pizza day (for everybody else), then left me alone for 15 minutes before some more questions.
-They say they'll call within the next 24 hours with an answer. 2 days later I get a call saying that they didn't think I'd be a good fit because I didn't seem enthusiastic. I was not enthusiastic because by the end I did not want the job.
During the same period I got offers from the other companies I applied to and took a job superior to the one available at the evil company. No way am I sitting through that sort of thing again!
I recommend people walk away when this BS happens. It's not worth it.