I'm legitimately curious how you arrive at the conclusion that the "I don't do anything for free" crowd is less likely to put in effort and find a good long term fit.
It seems that somehow in the startup community, doing things for free (unpaid overtime, unpaid internships, unpaid working 'interviews') is considered a badge of honor. I don't understand how that became the expected and accepted situation.
Being a 'sucker' is seen by many employers as a very desirable trait in an employee. From an employer point of view, why wouldn't you want the guy who happily works for free over the guy who is 'difficult' and insists on paid overtime for every hour after 40 hours a week.
And as someone looking for work who is just very good you need a way to differentiate yourself from everybody else who is also very good. A history of being willing to work ridiculous hours for free is a pretty good differentiator.
You're conflating two issues: "Unpaid overtime, unpaid internships" with "unpaid working interviews".
OT and internships are post acceptance of a work offer. Interviews should be used by the individual to find the best fit for themselves. If you think spending 10-20 hours making sure your top choice really is where you want to spend the next several thousand hours of your work life is "free work" I think you misunderstand the value that the individual gets out of the diligence.
It seems that somehow in the startup community, doing things for free (unpaid overtime, unpaid internships, unpaid working 'interviews') is considered a badge of honor. I don't understand how that became the expected and accepted situation.