Super Volatile

Here's what you do. You come up with a cool idea of an open-source project. This becomes your company's development sandbox. Candidates are asked to then contribute to the project in some way. You want to see them code? Ask them to develop a module. You want to see them tackle a bug? Ask them to choose one from the bug-list. This works for every aspect of development work. You can design features together. You can gauge their communication skills. You can see how well they handle reviews. You can ask them to document their work and see how well they can write. But above all, you're not taking advantage of anyone, and true developers probably won't mind investing time into an open-source effort.

Interesting idea. It certainly requires more effort than just having few conversations, so I don't see it becoming a standard procedure, but it may be worth trying.