"you would be silly not to include some form of practical test"

Yes, I'm coming to the realisation that it's idealistic to assume that anyone with N years experience will be at a certain level of ability.

"(potential) is best measured by talking with them about a project they really cared about"

I agree. I've always thought that once you've made sure that a candidate's programming knowledge isn't fabricated, the best way to evaluate them is to get talking about code. Whether that's proprietary code they've written but can't share, or it's on a GitHub profile for all to see shouldn't make a huge difference.