I won't even bother listing all the possible shortcomings - it's a great water cooler idea but it won't fly in the real world.
* Person comes in, doesn't work out, and then goes to work for a competitor and can now (a) talk about your processes, (b) tell them who the key people are to target
* Person comes in and tells technical recruiters who your top talent is
* Person comes in, explains (good/bad) reasons that this code sucks and whoever wrote it was wrong, and makes everyone feel like a fool for working there
* Developers A, B, and C love the guy yet manager hates him (or vice versa)
Interesting idea in practice but I seriously doubt any company does this instead of the traditional techniques he mentions. The "traditional" techniques have evolved over 100 years of working with and interviewing engineers and software folks - there's a reason those techniques are still used in 2009.