It might be an incredibly common interview question, but it's not an incredibly common day-to-day task, particularly when there are methods built in to classes that perform this function. An interesting task? Perhaps. But not reflection of the dev's skills, per se.
You're not asking about syntax with this. It's a problem solving question and at the end of the day, the only real metric here is not whether a dev could code this up, but whether he can code it up quickly, under time constraints, while being stared at, under pressure, with rent or a mortgage on the line, and maybe kids to feed.
I am hard pressed to think of even one real life dev task I had in my entire career where I had to solve a problem under those circumstances. For most devs, we take ownership of the problem and solve it at our desk under reasonable time frames without the spotlight. For bigger problems, we might think about it in the car on the way home. We might sleep on it over the weekend.
That doesn't apply to reversing a string, of course. But you have to consider that, depending on the dev's background and skills, he may be spending time in jQuery, maybe Spring and Hibernate (for Java guys), maybe even some CSS. Maybe he's a GWT guy? Maybe he was assigned to a team dedicated to (God forbid) EJBs. In other words, he may be multifaceted and spends more time working with an API than "just" raw language coding. The language is just a means for working with the API.
And the one thing you want to measure is not something he does daily. Now, if he can't use a for loop, feel free to mock him. But reversing a string? That's clearly a puzzle.
EDIT: I can't get this part out of my mind:
"Is incredible how badly the test goes with the people! I interview for myself or others more than 100 people (of any background, including university, tech schols...) and I think only 10/12 people do it correctly - barely-"
So you continue to use that question? Despite the results? So that when you do hire a guy that passes, he won't ever do this on the job because you know you damn well he should use the reverse() method? Because you won't pay him to code it raw and waste time and money when there is a 1.5 second solution to this? That's sadistic. :-)