Honestly this sounds terrible. I would never take a proctored test for an interview. Might as well just send the company a copy of your grades from some computer tech class in school, because that is basically what you're proposing.

I will happily spend a few hours preparing an open source project and presenting what I've created as part of a final interview.

Relying on testing alone is going to get you good test takers. A great team needs a mix of of skills- technical experts, business minded folks, and motivated leaders. I don't have the magic answer but I'm sure that proctored testing is the wrong answer.