"it effectively has weeded out some people who clearly would not be able to function in their daily job"

Did it, or did it weed out people who got so nervous at being asked to perform for an audience on demand that they froze up? I have social anxiety, and while I've been super lucky to get jobs through referrals of other colleagues (who introduced me ahead of time to folks I would be interviewing with), if I had to do this in front of a bunch of strangers judging me, I'd probably appear to be very bad at my job. How I act normally with people whom I know is very different than how I act around people whom I feel are just there to judge me and decide how worthy I am.