It is completely scalable. I did it. The second round was an estimate for a more significant 'paid' task that advanced the company's goals (i.e. real work). The third round was completion and delivery of the task (which paid just enough to keep qualified candidates interested). My time was more valuable than the cost of having the few interested candidates that got that far do the various useful bits of work.

At the end I did a few long long interviews and really got to know who I was going to be working with and they me.