It kinda reminds me of CS-whores. The one or two CS girls in each graduation class that regularly used sex-appeal/flirtation to get CS guys to do their homework (very successfully too!).
At some point your no longer testing people's knowledge and creative thinking, but their social skills and ability to manipulate others (and maybe their breast size/size of their 6 pack).
I feel like the professor treated this like a sick little game and enjoyed himself while doing it.
At the end of the day you are competing against your peers either through a curve, or through your raw grades because you're all going into the same fields and are competing for the same jobs with your GPAs. Making a system where cut-throat behavior is encouraged and putting down your pays off is really sad.