I agree that bad hires should be avoided and that filtering early is best for everyone. The question is whether a stretched out interview process is the most effective way to filter out misalignments.
Interviews may be the best tool available while searching for unknown talent, but that does not mean they are a good tool. The process is artificial, no matter how much effort is put into framing it otherwise. Even the most honest interviewee will have difficulty behaving as they would in a normal working environment, while many are more than willing to be actors playing a part. Likewise, interviewers are interacting with the interviewee in an unnatural way and are making judgements about the interviewee in a fashion different from making a judgement of a colleague.
Even if one could somehow get beyond that artificiality, what sort of impression does it leave the candidate with? There is a world of a difference between working for a company that is careful and one that is bureaucratic, one that is focussed upon making sound decisions and one that simply follows process. It can also leave the impression that key decision makers are difficult to access, making it more difficult to get the actual meat of the work done.
As for competing for the best employees, a drawn out process doesn't benefit anyone and is the least detrimental to companies that offer a genuine competitive advantage. Keep in mind, that candidate may already be part way through the interview process at another company (or even offered a position) by the time an they are offered the first interview at your company. While both parties form impressions of the other during the interview, the candidate will gain more insight about the company's functioning in how they handle the hiring process than the other way around.