[quanticle]

    I have not tried it. But in my next business venture, I plan to actually do 
    peer programming with the candidate.

As a candidate, I can highly recommend peer programming. One of the greatest interview experiences I had was interviewing with a local shop where the employee and I reimplemented a Set class using TDD and pair programming. The employee sat at the keyboard, so I didn't have to deal with not knowing keyboard shortcuts or the unfamiliar operating system (OSX), but he was very careful to only write the code that I asked him to write, and to let me make my own mistakes.

It was one of the most enjoyable, and, dare I say it, relaxing interview experiences I've had. Though I didn't get an offer, I wouldn't hesitate to recommend that company to any of my peers who're looking to make a change. Also, like you said, it was a second tier screen; after an initial screen consisting of a more traditional phone interview where I had to write some Javascript.