This is why take-home problems are almost completely irrelevant except for filtering out good candidates. Eventually those problems optimize for perfection which help out those who 'cheat' at the process and people that otherwise put in earnest efforts are rewarded with denials. This is something I've experienced before in my job search where I would put in an honest effort and get 90% of the problem solved, but get denied because my solution wasn't flawless.
So allow me to call bullshit on your own claims that this is the right way of determining technical qualifications.
Not all companies handle it like this. I had a take-home exercise as part of an interview last year. I hit a real snag on a fairly small part, I couldn't figure it out, and I ended up leaving a bug in my submission because I simply ran out of time. Very frustrating.
It was raised at the interview; I admitted that I knew it was there, and that I hadn't been able to figure it out. We discussed possible causes: it actually turned into a pretty interesting, though minor, technical conversation. The interviewer eventually told me that he had figured it out after a little investigation (and I expressed my gratitude for the explanation!)
I ended up getting an enthusiastic offer from them.
It's possible that the company stated the take-home work in terms of non-negotiable deliverables, and their baseline for allowing a candidate to move forward is 100% of those, and they prioritize candidates who take initiative and do more work beyond the base requirements.
... not that I would agree with such a process (it biases towards people with more free time, like people with fewer dependents and people who are currently out of a job / underemployed), but it's very possible that this is what you faced.