Anything longer than 2 hours is too long unless you get paid. You're automatically disadvantaging people who aren't in a position to dedicate a large amount of time to free work. Plus if say they're only offering 5% interviewees a role, for 95% of interviewees it's a complete waste of time. 2 hours is a lot more acceptable as a waste of time vs 8+ hours.

As a general rule, if I'm asked to spend time on one of those coding assignments, I assume I have the job unless I really F it up. Only the top 2-3 contenders should be asked to spend more than half a day on one of these assignments, and they typically take half a day or more.

The best coding assignment I had from an interviewer is one where I got paid. It was part of their process, and wasn't a complete waste of time.

I really like this idea, however that's far too long a time investment for an interview. Perhaps monthly events on a weekend with a potential to be recruited?