OK, I wholeheartedly agree with that. I was thinking, though, that discussing a problem such as the one with the linked list at least would give one sample point of the candidate's ability to reason. In any case, what are you supposed to do if you are restricted to making your decision based on interviews?
It is a data point, but of questionable value generally. Consider this: even academic settings give students multiple chances to demonstrate their true level of competence over a course of months in a very constrained subject and a highly controlled setting. I don't think it's rational to think a panel of interviewers can do it in a matter of hours.
I think interviews are basically just a way we fool ourselves into thinking what is essentially a random chance biased by a self-selected set of applicants is (relatively) more objective.
I don't know that there is a good alternative. I am quite sure the status quo is thoroughly broken.