Does this fully replace the onsite? If I'm fully employed, interviewing with three or four places, and expected to take a day off and visit each of them, adding another full day of work on top of each is a big hurdle.
To keep going with the devil's advocate: If one of your competitors says "ok based on your initial chat with the director, we're gonna bring you straight to onsite" and you say "do this ten hour problem" guess which I'm going to favor? A hiring manager confident in his ability (probably learned through trial and error) to sniff out bullshit is a positive signal to me, the candidate. Intense homework tells me one of two things: they have way too many candidates for the role and there isn't enough data to screen by hand (this makes sense for seasonal stuff like entry-level, not so much elsewhere IMO), or they don't really have a solid picture of how to interview. And in the latter case, that probably means if someone else on the team or in the company suggests a bad but speciously-attractive technical design, they're also going to be unable to call that out.