With regards to your last point: I don't doubt that the vast majority of hiring processes aren't correlated with on-the-job success, but Google is definitely the kind of company that would strive for objective measures and to refine their process. They at least claim it's working. I think it was on the Stack Overflow podcast that I heard a discussion of Peter Norvig's remarks about this in Coders at Work. He evidently posted something similar online:

"Our interviews are more to do with practical problem solving, not with puzzles and tricks. Our interview scores actually correlate very well with on-the-job performance: we are doing quite well at hiring the right people, we believe, and we work hard at analyzing the process. Peter Seibel asked me if there was anything counterintuitive about the process and I said that people who got one low score but were hired anyway did well on-the-job. To me, that means the interview process is doing very well, not that it is broken. It means that we don't let one bad interview blackball a candidate. We'll keep interviewing, keep hiring, and keep analyzing the results to improve the process." http://www.mv-voice.com/square/index.php?i=3&d=&t=16...