Off-site contract work is NOT a solution. Hint: the candidate may not be doing the work himself; he may be farming it out to oDesk or Elance at a fraction of the price and playing WoW all day.
The point of resumes is to see if the candidate actually has the requisite skills for the job. The point of interviews is to verify what is represented on the resume is likely to be true. And, as the op is suggesting, a small contract would verify that the candidate can complete projects for the company and to their satisfaction.
he may be farming it out to oDesk or Elance at a fraction of the price
This is just plain paranoia. No one would do this and expect to be employed at a company for very long. Also, if you've ever farmed work out to oDesk/Elance, you might not want that work to represent you in an interview process (even if you were able to have it completed in a reasonable amount of time).
Also, after they have submitted it, go into detail with them as to why they did this, or why they did that. Tech interviews with puzzles, quizzes, and logic are just a massive waste of everyones time.
And if someone at oDesk or Elance does that nice of a job you should just hire them.