You are right about the scalability of the process, but not about the rest. It seems possible to design weekend projects that would be way better for evaluating senior engineers than asking them to do CS brain-teasers on whiteboards. CS topics are important, but the typical interview is not great at identifying who is good at using CS to solve real production problems. It seems like the typical interview doesn't have many false positives but a lot of false negatives.

The common approach for big companies is to declare that false positives are way worse than false negatives, but if the problem is that you can't find enough developers to fill your roles, it may be better to have false positives coupled with a trial period or something similar.