Maybe so, but…
Part of the interview process isn’t figuring out if you can solve all these little problems, but how you deal with the situation. IMHO, this shows was a clear indicator of someone that might not be a good fit. The point of an interview isn’t to sell a person on the job but to determine if the candidate is a fit for the job. Once fit it determined then you can do the selling.
We use these techniques here at Telligent. The point isn’t to solve the silly little problems but to figure out ‘how’ people solve problems and to give individuals the opportuntity to collaborate together during the interview to see how they work with one another. If you work with someone through these mini-problems during an interview and exit thinking, “wow, here is someone that I wouldn’t work well with” that usually equals ‘no-hire’.
For us, anyone that comes in with the attitude that they don’t need to be interviewed because of their credentials, background, or industry experience is automatically a no-hire. Personally I could care less if someone has an MBA, doctorate, invented the Internet, 4.0 GPA, blah, blah, blah. I care more about is this person going to fit in our culture and with the way we like to work then about what their skills and abilities are, i.e. aptitude vs. ability.
In other words, in this case it sounds like the problem wasn’t with the interview process but with the candidate.