The difference is interviews reject people based on what's on the paper, and in-the-interview tests are usually limited enough due to time constraints that you can't get a good picture of a persons proficiency.
If you give anyone the chance to show their worth in a 10 month program, that's sure as hell a lot less discriminatory and IMHO equates to a more qualitative hire.
Sure you can only keep the amount of people you have openings for (in this case 35%), but you are very certain you hire the person you want working for you, and not the person with the shiniest resume.
And that what's really happening here with this no-interview no-skills-asked-for open-hire policy (and its high turnover rate), is that they are keeping the cream of the crop and shedding the wheat from the chaff.
It could be.