Agreed. Maybe their next step can be a 1-800 number style menu system for doing the initial phone screenings :)

Why not 2 days, then? Maybe he should complete an entire project for free - why not, for a "several year investment?"

Personally, I think it's great when companies not only advertise these kind of practices with pride, but then send staff out onto the net to defend them against a veritable tide of criticism. It will certainly help you narrow your pool of applicants, and that is clearly what you are after - it says so in your "how to hire a human" flowchart! Haha.

Employment is a two-way street, especially for someone in-demand as a Rails engineer.

Something about this post tells me that there is not actually that high of a demand, and that there may actually be a glut.

Strictly-speaking, there are probably more people that know Rails then there are jobs requiring it. Even given that, the balance of power in the labor market is still supply-side. A Rails engineer can easily get jobs in just about any other platform fairly easily, and probably already has on occasion. But a company can't magically turn a need for a Rails coder into a need for a Java one.