> Fast students are smarter.

Assuming this is true (others have already addressed a few of the many reasons it might not be), wouldn't that imply that practically all existing tests are already flawed? If you want to grade on time, every exam should be graded with a formula taking both the time and the correctness into account. A binary "fast enough" vs "not fast enough" is about as useful as a pass/fail class grade.

The exams that felt like the fairest reflections of my own knowledge were proctored in-person, closed book, and time unlimited. Of course, being time unlimited works better for quantitative/engineering exams. I haven't put much thought into more qualitative/liberal arts type exams.