I turned her down because I'd gotten a really bad impression of the whole process. No other company I've interviewed at have managed to be nearly as Kafkaesque in the hiring process, and several of the Google recruiters I've spoken to over the years have vented their frustrations about the process at me when I told them this, while non-Google recruiters have gleefully told me they hear this a lot and consequently see less and less competition from Google for candidates.
I'd consider a request from a Google recruiter for an interview again, but the threshold for me to bother starting down that route again has gotten higher each time - I don't feel Google is worth the hassle unless they were to approach me with something exceptional.
This is not true for everyone. I see it as more of a failure on Google's behalf to create a good selection process. The flawed assumption you're making is that, since they have a noticeable false positive rate (i.e. good people getting rejected), they don't have false negatives (i.e. unqualified candidates getting offers). There is no guaranteed correlation between false negatives and false positives.
To carry this a little further, I would argue that it's very likely that some bad engineers get into Google because, by definition, their selection process is not correctly picking good engineers - just a rough approximation of what they think makes a good engineer.
But you have to look pretty hard to find those engineers...much harder than you do to find quality engineers that have been turned down by Google. And I believe it's intentional...that those false positives are about seeding the rest of the industry with people rejected by Google. I believe they interview more candidates than they need to bring in to fill their open positions in order to feed the perception (not the reality) that Google's engineers are the best of the best. That's the perception they care about, not the perception that their interview process is good at choosing employees.