I'm more often on the hiring side of the table than on the other. Probation periods exist specifically to address the issue of hiring false positives, and they work fine.
Your story is only possible if the interview process failed miserably. If your process sucks and results in a lot of false positives, that's your problem. Don't use it as justification for milking candidates for unpaid work towards actual deliverables.
One must not use probation as a get out of jail free card. We used to think the same way you do, we ultimately realised we were wrong.
Probation exists to be used only extreme circumstances, not as a catch all for "hey, sorry we made the wrong hire". It's more expensive to hire a candidate and kick them out on probation than to avoid making the wrong hire. This is another reason my approach works - we don't "milk" free labour, we don't need it. Our interview ensures we make the right hire first time, every time and part of that process is some "real" work.
Our interview process is awesome. Refined over a period of 10 years. Candidates learn something, we learn something, we collaborate with them. We often have candidates, even those who do not receive a job offer, compliment us on our process.
I'll write our interview process up one day and share it on HN so others can benefit.
Your story is only possible if the interview process failed miserably. If your process sucks and results in a lot of false positives, that's your problem. Don't use it as justification for milking candidates for unpaid work towards actual deliverables.