My main gripe was with the hard 2 hour requirement and the immediate dismissal of it based on what I felt were either trivial or inaccurate concerns. Additionally if you created a PR for the project any point past the 2 hour mark you were not considered anymore. Having a project is fine, but if the applicant takes the time to do the project and it's at least 80% of the way there I think interviewers are doing themselves a disservice by dismissing projects that are not perfect. There is no way to accurately determine whether that person is a good fit or not based on that little information. You might find that they spent more time planning for example and wrote something that would scale better if more time was spent on it. IMO people who plan more than they code are better assets.

In essence, if you require a project to be done for an interview regardless of the time limits and the applicant makes a reasonable effort and demonstrates adequate competency then IMO you should always give them an interview. If you're looking for something perfect then pay them. If you put hard time requirements on the project and expect it to be flawless you give off the impression that people are required to work under pressure.

That being said, I think it might be worth considering giving people the option of a take home project or a long interview. I know one guy who refuses to do take home projects and rather just sit in an interview all day and other friends who are the exact opposite.