It seems like some companies may be unaware that not only are they interviewing prospective employees, but candidates are interviewing prospective employers.

I guess if your goal is just to hire desperate people who currently have no better choice (and who will leave as soon as they do), then you can flaunt how little you care about the candidates or the process. But if you're hoping for something better than that, I wouldn't run off as many candidates as possible.

I mean, this is probably a time-saving way to filter out a flood of poor candidates, but you're going to also be filtering out good candidates at a very high rate.