One thing my experience in HFT has taught me is that technical ability is only loosely correlated with profitability. So I wouldn't conflate Renaissance's success with their hiring practices.
Picking up on your use of the word heuristic, "hiring the best" is very much an optimization problem. Specifically, there's a signal detection problem inherent to hiring in which you want to maximize your hits (selecting the best candidates) while minimizing your false alarms (hiring someone who turns out to be a bad candidate).
There's another layer to this optimization problem, which is that you want to minimize costs, both in time and in money.
As such, there are bound to be many heuristics that are close-to-optimal. I don't know whether excluding people with a background in finance is one of them (in fact, I suspect it's not), but the use of such a heuristic is not prima facie absurd.
In fact, using (good) heuristics in hiring is a feature, not a bug.
The problem here is that the heuristic is (I think) bad.
2. That fun might have these heuristics that GP talks of, and for them, the people they hire may well be the best for them. As in, motivated and attitudinally oriented towards what they want, and more able to work free from the assumptions of _knowing_ how it's done in finance. They may be wrong in your case, but that's how heuristics work. To me, that's less of a bullshit case than trendy languages etc.
I do not think assembling a team for HFT is easy at all, especially now. There are a lot of good reasons for being very peculiar and selective. I am not sure industry outsiders who are just applying understand the dynamic or, in many cases, why a seemingly great candidate is rejected.