Would you feel differently if you owned the company, and you'd be paying the salary for months for someone who talked a good game but was incompetent?
In your hypothetical the implication is that the leetcode would be effective at removing people who “talked a big game but are incompetent”. I disagree with that.
I could be wrong about leetcode, but for me to realistically engage with your argument would be a tacit agreement with the premise, and I cannot engage with that in good faith.
The secondary challenge in the kitchen (beyond the challenge of hiring someone who'll simply show up when scheduled, ha) is hiring someone who has a genuine interest in cooking as a craft. It's true that being a line cook isn't especially glamorous work, but I absolutely need someone who has enough love for it that they're proud to show off what they can cook when it isn't my menu.
I interviewed someone who made nothing but scrambled eggs, hash browns, and grits, but they were cooked and seasoned to absolute perfection. This individual was one of my slower line cooks starting out, but the fact they had the drive to learn this level of cooking was good enough for me to invest time in them to improve that speed.
I look for the same love for the craft in software. Literally everyone who's worth their salt has something they've worked on that they will happily show off, or some technique (like, e.g., abusing generics to implement monads in Ada and why this is more interesting than the typical approach using interfaces), or some pet data structure (e.g., critical bit trees and what their pathologies look like vis-à-vis hash tables) that they try to shoehorn into everything, or some bit of code they've read (e.g., SQLite and the Tcl interpreter) that left a lasting impression on their practice.
There's a snag though: being worth one's salt only starts at being able to cut code. I need to witness a candidate write about and walk me through that very technical aspect of the craft that they want to show off.
Assessing craft requires interviewers who understand craft, and the literal only reasons I can see for using LeetCode are when the interviewer is themselves not an expert in the domain (perhaps for reasons of scale, among others), the interviewer cannot (or will not) engage in heavily technical conversation with a candidate, or the job is plainly not about writing software that works.
The role of an engineering degree is to teach you the things you should know about engineering. And an engineer should understand data structures and algorithms.