I really like this idea, but it's not easy to apply. Nowadays, most jobs involve writing code that are based on layers and layers of abstraction, so a lot time, you have rely on the API/docs that are given to you.
On the other hand, if the job requires a lot of algos and low level code, this will be a good test to gauge an engineer's thought process and mental capability.
Many libraries and abstractions that I come across don't have much/any documentation (or it's out of date, etc), so the ability to quickly look at the source and understand it still seems valuable to more than just low level programmers.
On the other hand, if the job requires a lot of algos and low level code, this will be a good test to gauge an engineer's thought process and mental capability.