So is it more likely that Google is filled with idiots that can't see the err of their ways, or that, across tens of thousands of individual hires, this is the most cost effective and produces the best results (minimizing false positives) on average.
College-admissions style interviewing just doesn't make sense for a company like Google.
FWIW, there are a couple edge cases (like javascript/frontend engineers) which my company (Facebook) has completely separate hiring tracks for. It works for us, but I'm sure Google has its own reasons for not doing that.