I'd say the latter.
It's frustrating to work with people who pretend they know more than they do rather than asking for help.
If this were the only type of interview question used the points you brought up would be a legitimate concern. Given that it was, in my case, married in a much greater proportion with concrete questions I maintain that it generated unique, useful information.
Traders generally have, prior to entering a trade, the opportunity to think through everything thoroughly and ask for help on the bumps. There are also times when the cost of the time for analysis is so great that a gut, if rough, call is needed, e.g. holding hard drive manufacturer equity as news of Bangkok flooding breaks. Being able to ball-park figures, after issuing a disclaimer about the uncertainty of one's estimates, is also a generally useful analytic skill.
It should also be noted that part of recognising the priority of things to be analysed is the degree by which they deviate from expectations - generating many of those expectations is a form of intuitive estimation.
But, as I said, it's mostly to estimate whether this is a person we'd like to spend 10-16 hours a day near. Constant righteous indignation would probably get annoying as fast as serial bullshitting.
And when a CEO does it, it can ruin companies.
But for that, data is needed and/or your estimate has to be better than the BS estimate
If someone comes up with "The potential market for flamethrowers is $500Mi" you better have the ability to check this before someone gets burned
I salute you, sir.
It also drew out people who may not be a fit for our desk's culture of camaraderie where answers to banter along the lines of "that's personal" or "that's not relevant to my job description" would be awkward at best.
Additionally, I have heard from consulting buddies (the heathens!) that it's can good way to see how well a candidate can bullshit on little to no relevant data.
In any case, I don't think it's empirically valid to conclude someone a moron for asking brain teasers in interviews. I never asked them whereas many people much smarter than me did.