National Instruments (Austin, TX) used to do that alot and it worked great. They start with some code critique and then slowly, starting with "how would you re-write this from scratch?" they get you to write some, following by popular "optimize for speed/memory" and so on.

I just recently had somewhat similar idea: to reverse tables and ask them to interview me. Not the typical "how do you like it here?" kind, but I want to ask people to ask me technical questions and see what they can come up with.