In that case couldn’t you give an automated test that more pertains to the job requirements and the applicants’ prior experience?
As for leet code vs an actually relevant test - I think this is probably laziness on the interviewer's part. Coming up with a good test (and keeping it up to date) is hard, and leet code questions are "good enough" to filter out the people who don't know what they are doing. Remember, most companies are fine with a high false negative rate if it keeps false positives low.
That is also my understanding, but everyone except young white males are in a protected class. Granted, young white males are pretty common in tech, but you would still be wise to design your HR practices in such a way as to avoid lawsuits.