There is a huge pool of exceptional junior engineers

When I hire juniors, I try to give them problems that I know they likely won't be able to solve in the interview because I want to see how they think about things. The problem has become that a lot of kids coming out of college have done little more than memorize Leetcode problems and outsourced classwork to AI. I've also seen less and less passion for the career as the years go by (ie. less computer nerds).

Unless the company is doing something that requires almost no special domain knowledge, it's almost inevitable that it's going to take a good while for them to on-board. For us, it usually takes about year to get them to the point that they can contribute without some form of handholding. However, that also mostly holds true for seniors coming to us from other industries.

This is similar to what my advisor told me my PhD thesis defense would be; your committee would probe you until you got to the limit of your knowledge (generally in your domain but not specific to your exact topic) and only then could they test how well your reasoning abilities. I think this is a great evaluation technique but it was common practice in my PhD program that, as you started getting close-ish to your defense, you'd organize some practice sessions with your peers where you could recreate that kind of environment because being able to step beyond your knowledge, especially in front of a group of gatekeepers (your thesis committee or potential employer), while maintaining a professional level of composure is difficult! And most of us couldn't quite handle it well when we would practice with each other but after a few sessions we'd feel comfortable in that state, at which point the pass/fail is, in our opinion, much more reflective of your actual reasoning abilities. As an interview tactic, especially for juniors, it's an interesting idea and I'd be curious to know how well you think it works, but I think it would take most 90th percentile candidates 2 tries to really demonstrate the kind of critical thinking and reasoning skills that you're looking for.