I took a look at leetcode when I was interviewing and decided it was a waste of time for me to learn that dance. I was happy with my chances with the companies that didn’t use it in their interviews. And it worked out fine.
Side projects will help you learn useful skills and it is the suggestion of OP that it should be used by more companies in place of leetcode interviews.
Btw, a lot of companies don’t use leetcode for hiring. In my last job hunting season, I would guess than less than 20% of processes used leetcode. Pretty far from “most” companies.
The leetcode dance is, at least for me at this point, much lower effort than starting a side project on the understanding the code I produce will be reviewed during interviews. It's like Sudoku, once you've done a "few", you get to the point where you're able to solve them quickly.
The nice thing about leetcode it is easy to bound the time to what you can handle. I do one puzzle a week and set a timer for 20 minutes. Then I get the answer and browse the forum. It's basically the equivalent of solving the Sunday crossword for me, and it keeps my algorithm skills sharp. Probably no worse than burning a lunch hour on HN.