If a candidate doesn't have "several hours" to engage in a process intended to lead to both sides investing thousands of hours over the coming several years, they're welcome to apply elsewhere.
For every time I've interviewed, I've done several hours of homework on the company, understanding their competitive position, reading their financials (if a public company), founder bios (if a startup), bios of the people I'll be meeting with, etc.
I'm not doing this out of desperation; I'm doing it because I'm picking the company just as much as the company is picking me. Conversely, I'm willing to "jump through hoops" provided I believe that the company believes that hoop is helpful in selecting strong employees, because ultimately, I want to work at a company with strong colleagues and the hoop is a signal that the company wants the same thing.
Fair disclaimer: I haven't applied anywhere in the last <long time> and in my 20s, I enjoyed the take-home programming challenges. To this day, I recall enjoying Acclaim (game company)'s take home test that was rudimentary AI for a turn-based very simple game. I crushed it, flew out to interview, and got an absolutely laughably low offer (par for the industry), but I still think fondly of "doing that homework".
I've also been asked head-scratchers before. I had a recruiter ask my GPA and SAT scores for a role in my late 20s. Wait, WTF did you just ask me?! I answered, and that firm (D. E. Shaw & Co.) was the most-talent dense firm over 5 employees that I've ever experienced. If I'd have indignantly replied that my SAT scores were irrelevant to the position and none of their damn business (both are arguably true), I'd have missed out on one of the best work experiences of my life (and two handfuls of those colleagues are still working with me today, 3 firms and 17 years later).
Anyway, sorry for the long response.
You're picking the company. Do your homework.
They're picking you. Do their (reasonable) homework if you believe they're assigning it for the purpose of giving you great future colleagues.
I'm currently employed, so I'm only spending 1-3 hours per week on my search.
I have enough experience, education, and honors in school that you shouldn't waste my time with pointless homework. I've never seen a job programming test that was a more accurate measure of ability than the homework and tests I took in school.
Look at it from the candidate's view. I send out a bunch of resumes. About 5-8 of them want me to take a technical test before they call me or before I meet them. 1-2 of them are willing to proceed directly to an interview without insulting me and wasting my time first. So, I focus my energy on the people who take me seriously and treat me like a professional.
It's physically impossible for me to do a technical test for everyone who demands it. I don't have the time.
If Google or Yahoo asked me for a several hour pre-interview screening test, I'd probably do it. If your no-name startup is wasting my time before an interview, I'll just look elsewhere.
Also, in my experience, a pre-interview screening test is anti-correlated with good work environments. Of course, they'll say I'm "not a team player" for refusing the test.
After I did a bunch of pre-interview screening tests, and only rarely progressed to the interview stage after doing the test, now I don't bother. I know my solution is correct, but still not even an interview after I do the test. For the handful that did interview me, I wasn't impressed by them. Why am I wasting my time with people who don't respect me? Why should I waste a couple of hours for the privilege of maybe getting a chance to talk with the hiring manager, who's already pre-qualified himself as a twit by making me take his stupid test?
I'm even reluctant for post-interview programming tests. Once, someone asked me to do an assignment after the interview, and implied I'd get an offer if I passed. I did it, I know it was a good solution, but no offer. There's even people who try to put free consulting in the test, like the guy who asked me to write a program that connected to Interactive Brokers and executed VWAP trades.
I'm even reluctant for on-site tests now. Just a couple weeks ago, someone asked me to do a test, said I could use whatever language I wanted, I picked C/C++, and then they laughed at me for using pointers. Why bother?
If you know your stuff, you should be able to evaluate someone by talking with them for 15-30 minutes. If you aren't willing to spend 15-30 minutes evaluating me, based on my experience and education, then I'm not wasting a couple hours on your stupid pre-interview test.
Yes, I may be missing out on good jobs, but they are missing out on a good candidate.
I think the question is: could they be used against you?
I don't see how they couldn't, and you wouldn't know.