No, not throwaway projects. Real projects. And if they are late or poorly implemented, well, they would have been that way had you hired the sap anyway. But now you can just quit paying him, and try again.
I guess the whole point of the article is, that is a myth. Interviews don't work.
Anyway, companies that have the time and resources are turning to this more - the summer internship program at microsoft is actually a 3-month interview, where the intern works on real code and gets a real review.
Internships work pretty well for everyone at entry level. Not just programming: lawyers, investment bankers, consultants, etc. But you don't really have that option for more experienced applicants, especially those who are employed elsewhere.
