I don't know about Automattic, but in many larger companies, super-stars-with-nothing-to-prove go through different hiring experiences than most other employees. I can't imagine Google or Dropbox sat Guido Van Rossum in a room and asked him to reverse a linked list in 'whichever language he was most comfortable in'. Although I might be wrong, of course... ;)
For people who have something to prove, well, the only question is which particular strategy the company will use to ask them to prove it. As far as it goes, 20 hrs of paid labor outside of work if your contract allows it, is not the worst I can think of.
I think there's quite a difference between your average no-name senior developer and someone like GVR. Of course they didn't ask him to do coding exercises; the whole world knows his work. But as a member of the population of senior developers who would have his abilities tested in an interview situation, offering me $25/hour for a significant amount of my time is a bit insulting. I understand that they aren't actually attempting to value your time at $25/hr and it's more of a show of good faith than an attempt at complete compensation, but come on, last time I did a short term contract was 9 years ago and I billed $150/hr. I haven't been in the world of contracting lately but my salary has more than doubled since then, so my feeling is that $25/hr is like saying "do fizzbuzz for me. I'll give you a dollar."
On the contrary, Max Howell, who wrote HomeBrew for Macs was asked by Google interviewers to invert a binary tree. To quote Max: "Google: 90% of our engineers use the software you wrote (Homebrew), but you can’t invert a binary tree on a whiteboard so fuck off."
For people who have something to prove, well, the only question is which particular strategy the company will use to ask them to prove it. As far as it goes, 20 hrs of paid labor outside of work if your contract allows it, is not the worst I can think of.