This is an interesting trend that I have seen more and more companies, particularly in the technology sector, trying out. It certainly can have measurable benefits because, as the article points out, no amount of interviews of questionnaires can show nearly as much about the skill, work-ethic, or acumen of a candidate as actual, live-fire, substantive work.
That having been said, there are potential problems afoot here. First, these tend to either screen out candidates who are currently employed (or, if it does not screen them out, it places the hiring part and the candidate in a position of potential legal liability). Second, depending on how the person is paid, there can be potential Fair Labor Standards Act issues at play (wage and overtime law, for those keeping score at home).
On the flip side, candidates have reason to be wary. I have seen requests for participation in such “trial projects” which turned out to be little more than an attempt to get cheap or free work from the candidates.
All in all, I believe there is a place for this in some company’s hiring arsenals. That having been said, incorporating this into a company’s hiring process should not be done without careful consideration (as well as a check-off from the company’s legal counsel).